After the Moscow treaty Finland started its reconstruction. Political and military developments in the Europe of 1940 showed that the situation was still unstable. The proclamation of Estonia, Latvia and Lithuania as Soviet republics and the rapid occupation of Denmark and Norway caused alarm in the minds of Finns. The feeling of uncertainty was deepened by the transit agreements with Germany and the Soviet Union. The interference by the Soviet Union in Finland’s domestic affairs and foreign policy led into improved German-Finnish relations supported by the acquisition of arms from Germany.
Information about the possibility of war between Germany and the Soviet Union reached Finland in the spring of 1941. As the threat of war grew troops along the borders were strengthened. In mid-June full mobilisation was realized by calling into service about 400 000 men and women. A German mountain army was deployed in northern Finland.
When Germany went to war against the Soviet Union the Finnish defence forces first took defensive positions on the eastern border. In July the field army started its offensive action firstly to re-establish the old state borders and regain territories lost in the Moscow peace treaty. Having achieved these objectives the offensive was continued in order to gain advantageous defensive positions on the Aunus and Maaselkä Isthmuses and the Karelian Isthmus where the offensive was brought into a halt slightly southwards from the old border.
The attainment of the military objectives was followed by trench warfare which ended in June 1944 when the Soviet forces launched their great offensive.
During winter 1944 Soviet bombers raided Helsinki in three big attacks trying to press Finland to accept peace. The failure of peace negotiations preceded by the bombings led to the decision by the Soviet Union to sever Finland from the war by a strategic blow.
The Soviet forces deployed in the Karelian Isthmus were strengthened in the spring of 1944 by a new army, several artillery formations and other independent ground, sea and air force units. Altogether about 3 000 guns and mortars took part in the fire preparation. In the morning of the 9th of June 1944 the Soviet launched their offensive which quickly broke the defensive line in the Western Isthmus.
The Ribbentrop agreement between Finland and Germany, ensured by President Risto Ryti, quaranteed arms aid from Germany. After fierce fighting the Finnish troops succeeded in stopping the offensive wedges in the decisive battles of Tali-Ihantala and the situation was stabilized.
In the Aunus and Maaselkä Isthmuses the Soviet offensives undertaken around Midsummer eve forced Finland first into delaying action and finally the enemy was halted along the old state border by early August 1944.
After the stabilization of military situation President Risto Ryti resigned from his duties and Finland was freed from her obligations towards Germany. Peace negotiations with the Soviet Union were initiated in the end of August 1944.
A cease-fire was reached in September 1944 and on the 19th of September the Moscow armistice was signed. The conditions for peace obliged Finland to withdraw its troops behind the 1940 borders, cede Petsamo in its entirety and Porkkala instead of Hanko was leased to the Soviets as a naval base.