Following the beginning of the Pacific War, the threat of invasion by Japan, and the appointment of General Thomas Blamey as Commander-in-Chief of the Army, a major re-organisation took place, in April 1942. Lavarack was by now commanding I Corps, an AIF formation which was returning from the Middle East and North Africa. The First Army name was re-assigned to a formation built around I Corps, expanded above corps size with the addition of Militia units. The Army's initial area of responsibility was the defence of Queensland and northern New South Wales. (The Second Army was responsible for south-eastern Australia and the other components of Australia's defences were: III Corps (in Western Australia), the Northern Territory Force and New Guinea Force.)
In 1944-45, under Lt Gen. Vernon Sturdee, the First Army was based at Lae in the Australian territory of New Guinea. After a bar on the overseas deployment of Militia was relaxed, the First Army controlled many of the units which fought in the South West Pacific Theatre.
The First Army was disbanded in November 1945.