On his return to Japan, he was posted to administrative departments within the Imperial Japanese Army General Staff, where he unsuccessfully promoted a military reduction plan. Despite his ability, Yamashita fell into disfavor as a result of his involvement with adverse political factions within the Japanese military. As a leading member of the "Imperial Way" group, he became a rival to Hideki Tojo and other members of the "Control Faction". After the February 26 Incident of 1936, he also fell into disfavor with Emperor Hirohito due to his appeal for leniency toward the rebel officers involved in the attempted coup.
On 6 November 1941, Yamashita was put in command of the Twenty-Fifth Army. On 8 December, he launched an invasion of Malaya, from bases in French Indochina. In the campaign, which concluded with the fall of Singapore on 15 February 1942, Yamashita's 30,000 front-line soldiers captured 130,000 British, Indian and Australian troops, the largest surrender of British-led personnel in history. He became known as the "Tiger of Malaya".
The campaign and the subsequent Japanese occupation of Singapore included war crimes committed against captive Allied personnel and civilians, such as the Alexandra Hospital and Sook Ching Massacres. Yamashita's culpability for these events remains a matter of controversy, as some argued that he had failed to prevent them, though he had the officer who instigated the hospital massacre and some soldiers caught looting executed for these acts, and he personally apologised to the surviving patients.
It is thought that Prime Minister Tojo was responsible for his banishment, taking advantage of Yamashita's gaffe during a speech made to Singaporean civilian leaders in early 1942, when he referred to the local populace as "citizens of the Empire of Japan". This was considered embarrassing for the Japanese government, who officially did not consider the residents of occupied territories to have the rights or privileges of Japanese citizenship.
Yamashita commanded approximately 262,000 troops in three defensive groups. He tried to rebuild his army but was forced to retreat from Manila to the mountains of northern Luzon. Yamashita ordered all troops, except those tasked with security, out of the city.
Almost immediately, Rear Admiral Sanji Iwabuchi re-occupied Manila with 16,000 sailors, with the intent of destroying all port facilities and naval storehouses. Once there, Iwabuchi took command of the 3,750 Army security troops, and against Tomoyuke's specific order, turned the city into a battlefield. The actions of the Japanese garrison resulted in the deaths of more than 100,000 Filipino civilians, in what would be later known as the Manila Massacre, during the fierce street fighting for the capital which raged from February 4 to March 3.
Yamashita used delaying tactics to maintain his army in Kiangan (part of the Ifugao Province), until 2 September 1945, after the surrender of Japan. His forces, by then reduced to less than 50,000 by the tough campaigning of the British-Indian army, were ironically compelled to surrender to the allies in the form of General Arthur Percival, the man he had humiliated after the fall of Singapore. When Percival refused to shake Yamashita's hand, angered by the exterminationist tactics the Japanese general had employed against Allied prisoners of war, Yamashita burst into tears. Although Yamashita might have been expected to commit suicide prior to this surrender, he reportedly explained his decision not to kill himself by saying that if he did "someone else will have to take the blame."
From 29 October to 7 December 1945, an American military tribunal tried General Yamashita for war crimes relating to the Manila Massacre and sentenced him to death. This case has become a precedent regarding the command responsibility for war crimes and is known as the Yamashita Standard.
During his trial, the defense attorneys who challenged Douglas MacArthur deeply impressed General Yamashita with their dedication to the case, and reaffirmed his respect for his former enemies. American lawyer Harry E. Clarke, Sr., then a U.S. Army colonel, served as chief counsel for the defense, even going so far as to appeal the decision of the military commission to the U.S. Supreme Court, which affirmed the conviction by a vote of 7-2, with Justices Frank Murphy and Wiley Blount Rutledge each writing strong dissenting opinions.
The legitimacy of the hasty trial was questioned by many at the time, including U.S. Supreme Court Justice Murphy, who protested various procedural issues, the inclusion of hearsay evidence, and the general lack of professional conduct by the prosecuting officers. The considerable body of evidence that Yamashita did not have ultimate command responsibility over all military units in the Philippines (such as the Imperial Japanese Navy units at the Battle of Manila) was not allowed in court.
On 23 February 1946, at Los Baños Prison Camp, south of Manila, Tomoyuki Yamashita was hanged. After climbing the steps leading to the gallows, he was asked if he had a final statement. To this Yamashita replied through a translator:
"As I said in the Manila Supreme Court that I have done with my all capacity, so I don't ashame in front of the Gods for what I have done when I have died. But if you say to me 'you do not have any ability to command the Japanese Army' I should say nothing for it, because it is my own nature. Now, our war criminal trial going on in Manila Supreme Court, so I wish to be justify under your kindness and right. I know that all your American and American military affairs always has tolerant and rightful judgment. When I have been investigated in Manila court I have had a good treatment, kindful attitude from your good natured officers who all the time protect me. I never forget for what they have done for me even if I had died. I don't blame my executioner. I'll pray the Gods bless them. Please send my thankful word to Col. Clarke and Lt. Col. Feldhaus, Lt. Col. Hendrix, Maj. Guy, Capt. Sandburg, Capt. Reel, at Manila court, and Col. Arnard. I thank you."