Although his views were conservative concerning the issues of secession and slavery, and he had opposed the division of the Union as a legislator, at the start of the Civil War, Hampton was loyal to his home state. He resigned from the Senate and enlisted as a private in the South Carolina Militia; however, the governor of South Carolina insisted that Hampton accept a colonel's commission, even though he had no military experience at all. Hampton organized and partially financed the unit known as "Hampton's Legion", which consisted of six companies of infantry, four companies of cavalry, and one battery of artillery. He personally financed all of the weapons for the Legion.

Despite his lack of military experience and his relatively advanced age of 42, Hampton was a natural cavalryman—brave, audacious, and a superb horseman. He merely lacked some of the flamboyance of his contemporaries, such as his eventual commander, J.E.B. Stuart, age 30. He was one of only two officers (the other being Nathan Bedford Forrest) to achieve the rank of lieutenant general in the cavalry service of the Confederacy.

Hampton first saw combat in July 1861, at the First Battle of Bull Run, where he deployed his Legion at a decisive moment, giving the brigade of Thomas J. "Stonewall" Jackson time to reach the field. Hampton was wounded for the first of five times during the war when he led a charge against a federal artillery position, and a bullet creased his forehead.

Hampton was promoted to brigadier general on May 23, 1862, while commanding a brigade in Stonewall Jackson's division in the Army of Northern Virginia. In the Peninsula Campaign, at the Battle of Seven Pines on May 31, 1862, he was severely wounded in the foot, but remained on his horse while it was being treated, still under fire. Hampton returned to duty in time to lead a brigade at the end of the Seven Days Battles, although the brigade was not significantly engaged.

After the Peninsula Campaign, General Robert E. Lee reorganized his cavalry forces as a division under the command of J.E.B. Stuart, who selected Hampton as his senior subordinate, to command one of two cavalry brigades. During the winter of 1862, around the Battle of Fredericksburg, Hampton led a series of cavalry raids behind enemy lines and captured numerous prisoners and supplies without suffering any casualties, earning a commendation from General Lee. During the Battle of Chancellorsville, Hampton's brigade was stationed south of the James River, so saw no action.

In the Gettysburg Campaign, Hampton was slightly wounded in the Battle of Brandy Station, the war's largest cavalry battle. His brigade then participated in Stuart's wild adventure to the northeast, swinging around the Union army and losing contact with Lee. Stuart and Hampton reached the vicinity of Gettysburg, Pennsylvania, late on July 2, 1863. While just outside of town, Hampton was confronted by a Union cavalryman pointing a rifle at him from 200 yards. Hampton charged the trooper before he could fire his rifle, but another trooper blindsided Hampton with a saber cut to the back of his head. On July 3, Hampton led the cavalry attack to the east of Gettysburg, attempting to disrupt the Union rear areas, but colliding with Union cavalry. He received two more saber cuts to the front of his head, but continued fighting until he was wounded again with a piece of shrapnel to the hip. He was carried back to Virginia in the same ambulance as General John Bell Hood.

On August 3, 1863, Hampton was promoted to major general and received command of a cavalry division. His wounds from Gettysburg were slow in healing, so he did not actually return to duty until November. During the Overland Campaign of 1864, Stuart was killed at the Battle of Yellow Tavern and Hampton was given command of the Cavalry Corps on August 11, 1864. He distinguished himself in his new role at the bloody Battle of Trevilian Station, defeating Philip Sheridan's cavalry, and in fact, lost no cavalry battles for the remainder of the war. In September, Hampton conducted what became known as the "Beefsteak Raid", where his troopers captured over 2400 head of cattle and over 300 prisoners behind enemy lines.

In October 1864 near Petersburg, Virginia, Hampton sent his son Thomas Preston, a lieutenant and an aide to his father, to deliver a message. Shortly afterward, Hampton and his other son, Wade IV, rode in the same direction. Before traveling 200 yards, they came across Preston's body, and as young Wade dismounted, he was also shot. Thomas Preston died from his wound.^[3]

While Lee's army was bottled up in the Siege of Petersburg, in January 1865, Hampton returned to South Carolina to recruit additional soldiers. He was promoted to lieutenant general on February 14, 1865, but eventually surrendered to the Union along with General Joseph E. Johnston's Army of Tennessee at Bennett Place in Durham, North Carolina. Hampton was reluctant to surrender, and nearly got into a personal fight with Union Brig. Gen. Judson Kilpatrick at the Bennett Farm. His boyhood home, Millwood, near Columbia, South Carolina, had been burned by Maj. Gen. William T. Sherman's Union soldiers, much of his fortune had been depleted supplying his soldiers, and his many slaves had been freed. Understandably bitter, Hampton was one of the original proponents, alongside General Jubal A. Early, of the Lost Cause movement, attempting to explain away the Confederacy's loss of the war. Hampton was especially angry upon the arrival of black Federal troops to occupy his home state.