Hoover oversaw the FBI's great expansion during World War II and oversaw their role in the custodial detention program, including putting together custodial detention lists and the arrests of Japanese American community leaders immediately after the attack on Pearl Harbor.

Hoover played a major role—though largely in the background—in the conflict between the Justice Department and War Department/army over the mass exclusion of Japanese Americans from the West Coast. After Secretary of the Navy Frank Knox made the inflammatory statements about fifth column work in Hawai'i in the days after the attack on Pearl Harbor, Hoover contradicted Knox, stating unequivocally that there had been no such sabotage. Though Hoover's statement was withheld for a time, it was made public after the Tolan Committee hearings. Hoover later reported to Attorney General Francis Biddle that the Western Defense Command's intelligence capabilities were marred by "[h]ysteria and lack of judgment." [1] On February 3, 1942 Hoover sent Biddle his assessment of the push for mass removal: "The necessity for mass evacuation is based primarily upon public and political pressure rather than on factual data." [2] Though he didn't necessarily believe all Japanese Americans were loyal, he did believe that there was no need for mass exclusion, especially given the FBI's prior arrest of those on the custodial detention list. Hoover had read—and largely concurred with— Kenneth Ringle's January 26, 1942 report and Ringle's and Curtis Munson's earlier recommendations (see Munson Report ). Despite his presence at key meetings with the War Department and the esteem that the President held him in, Executive Order 9066 was signed and mass exclusion took place.

The reasons for his opposition to mass exclusion did not necessarily have to do with his belief in Japanese American loyalty. Among other things, he authorized his agents to conduct warrantless random raids on Japanese American households and to conduct surveillance in the War Relocation Authority (WRA) concentration camps against the wishes of the WRA. Later, Hoover opposed the lifting of the exclusion orders preventing Japanese Americans from returning to the West Coast until after the 1944 elections. One reason for his opposition to mass removal of japanese Americans likely had to do with burnishing the reputation of the FBI, whom he felt had already identified and imprisoned any "dangerous" Japanese Americans by the time EO 9066 had been issued. In his biography of Hoover, Richard Gid Powers also argues that Hoover simply didn't consider race or ethnic origin a stigmatizing factor with regard to loyalty, writing that he "would therefore reject any system of punishment that applied equally to the loyal and the disloyal simply because of their race; for Hoover the distinction between loyalty and/disloyalty was too important to be subordinated to any other test or standard." [3]

Though some assigned Hoover part of the blame for intelligence failures that abetted the attack on Pearl Harbor, he managed to mostly evade responsibility in the popular media. Thanks to the highly publicized capture of a crew of German would be saboteurs and the subsequent lack of sabotage as well as highly favorable portrayals of Hoover and the FBI in books, newspapers, newsreels and even a feature film, Hoover emerged from the war more famous and influential than ever.