He would later remark regarding the occupation directive guiding his and General Eisenhower's actions: "there was no doubt that JCS 1067 contemplated the Carthaginian peace which dominated our operations in Germany during the early months of occupation.
He heavily influenced United States Secretary of State James F. Byrnes' September 1946 speech in Stuttgart, Germany. The speech; "Restatement of Policy on Germany" marked the formal transition in American occupation policy away from the Morgenthau Plan of economic dismantlement to one of economic reconstruction.
From 1947 to 1949, he was the Military Governor for the U.S. Zone in Germany, and in that capacity commissioned Lewis H. Brown to research and write "A Report on Germany," which served as a detailed recommendation for the reconstruction of post-war Germany, and served as a basis for the Marshall Plan. Clay was promoted to lieutenant general on 17 April 1945 and to general on 17 March 1947. During this time he hired noted American intellectual and former U.S. Army Captain, Melvin J. Lasky. Clay would be instrumental in the creation of the influential publication Der Monat.
On June 25, 1948, one day after the Soviets imposed the Berlin Blockade, Clay gave the order for the Berlin Airlift. This was an act of defiance against the Soviets, an incredible feat of logistics (at one point cargo planes landed at Tempelhof every four minutes, twenty four hours a day), a defining moment of the Cold War, and a demonstration of American support for the citizens of Berlin.
Clay is remembered as a hero for ordering and maintaining the airlift, which would ultimately last 324 days, through May 1949. He resigned his post days after the blockade was lifted.
Among many other honors, Clay was given a ticker-tape parade upon his return to the United States on May 19, 1949. He appeared on the cover of Time magazine three times. Clay also received an honorary doctorate of the Freie Universität Berlin and became honorary citizen of Berlin (West) in 1953. One of the longest streets in West Berlin was named Clayallee in his honor, as was the Clay Headquarters Compound, which was located on the street. It held the headquarters of the Berlin Brigade, U.S. Army Berlin (USAB), and the U.S. Mission in Berlin. Marietta, Georgia named one of its major streets Clay Street in honor of his work in creating what is now Dobbins Air Force Base there. While now called South Marietta Parkway (State Route 120 Loop), it still carries memorial signs at each end dedicating the highway to him. In 1978 a new U.S. Army base in Northern Germany near the city of Bremen was named for Clay and until the end of the Cold War housed a forward-stationed brigade of the 2nd Armored Division, the 3rd Brigade, 2nd Armored Division, which had been based at Fort Hood, TX with the rest of the 2AD. This unit was redesignated as the 2nd Armored Division (Forward). 2AD(FWD) saw action in the Gulf War of 1991 before being disbanded as part of the post-Cold War drawdown of the U.S. Army.
Clay lies buried in West Point Cemetery. At his grave site is a stone plate from the citizens of Berlin that says: "Wir danken dem Bewahrer unserer Freiheit" (We thank the Preserver of our Freedom).
Clay was the father of two sons, both of whom became Generals. Clay's son, General Lucius D. Clay, Jr., held the positions of commander-in-chief of the North American Air Defense Command, the Continental Air Defense Command, and the United States element of NORAD, and was also a commander of the U.S. Air Force Aerospace Defense Command. Clay's other son, Major General Frank Butner Clay, served in conflicts from World War II through the Vietnam War, and was an adviser to the US delegation at the Paris peace talks which ended US involvement in the Vietnam War.