The outbreak of war in the Pacific in December 1941 found the British in Malaya completely unprepared. During the 1930s, anticipating the rising threat of Japanese naval power, they had built a great naval base at Singapore, but never anticipated an invasion of Malaya from the north. There was virtually no British air capacity in the Far East. The Japanese were thus able to attack from their bases in French Indo-China with impunity, and despite resistance from British, Australian, and Indian forces, they overran Malaya in two months. Singapore, with no landward defences, no air cover, and no water supply, was forced to surrender in February 1942. British North Borneo and Brunei were also occupied.

The Japanese colonial government regarded the Malays from a pan-Asian point of view, and fostered a limited form of Malay nationalism. The Malay nationalist Kesatuan Melayu Muda, advocates of Melayu Raya, collaborated with the Japanese, based on the understanding that Japan would unite the Dutch East Indies, Malaya and Borneo and grant them independence.^[80] The occupiers regarded the Chinese, however, as enemy aliens, and treated them with great harshness: during the so-called sook ching (purification through suffering), up to 80,000 Chinese in Malaya and Singapore were killed. The Chinese, led by the Malayan Communist Party (MCP), became the backbone of the Malayan Peoples' Anti-Japanese Army (MPAJA). With British assistance, the MPAJA became the most effective resistance force in the occupied Asian countries.

Although the Japanese argued that they supported Malay nationalism, they offended Malay nationalism by allowing their ally Thailand to re-annex the four northern states, Kedah, Perlis, Kelantan, and Terengganu that had been transferred to British Malaya in 1909. The loss of Malaya's export markets soon produced mass unemployment which affected all races and made the Japanese increasingly unpopular.^[81]