Developing Lao national identity gained importance in 1938 with the rise of the ultranationalist prime minister Phibunsongkhram in Bangkok. Phibunsongkhram renamed Siam to Thailand, a name change which was part of a larger political movement to unify all Tai peoples under the central Thai of Bangkok. The French viewed these developments with alarm, but the Vichy Government was diverted by events in Europe and World War II. Despite a non-aggression treaty signed in June 1940, Thailand took advantage of the French position and initiated the Franco-Thai War. The war concluded unfavorably for Lao interests with the Treaty of Tokyo, and the loss of trans-Mekong territories of Xainyaburi and part of Champasak. The result was Lao distrust of the French and the first overtly national cultural movement in Laos, which was in the odd position of having limited French support. Charles Rochet the French Director of Public Education in Vientiane, and Lao intellectuals led by Nyuy Aphai and Katay Don Sasorith began the Movement for National Renovation.

Yet the wider impact of World War II had little effect on Laos until February 1945, when a detachment from the Japanese Imperial Army moved into Xieng Khouang. The Japanese preempted that the Vichy administration of French Indochina under Admiral Decoux would be replaced by a representative of the Free French loyal to Charles DeGaulle and initiated Operation Meigo ("bright moon"). The Japanese succeeded in the internment of the French living in Vietnam and Cambodia. French control in Laos had been sidelined.