Abraham Lincoln's promotion of Halleck to a post in Washington left no single general in obvious control of the west. Grant and John A. McClernand therefore began to jockey for control. McClernand got Lincoln's permission to move against Vicksburg, Mississippi. Vicksburg appeared to be an unlikely target for the Union to attack, but the Confederates had fortified their position on a bluff over the Mississippi River–making it impossible for Union forces in New Orleans under Admiral David Farragut to link up with Grant's army in Tennessee. It was McClernand who now hoped to move on this key link.

Grant became aware of the plan in November 1862 and reshuffled his staff before heading his army down into Mississippi. Grant put William T. Sherman, another of his generals, in command of a second prong of the attack, hoping that Sherman could beat McClernand to the punch. An initial attack on Vicksburg by Sherman failed, and the armies soon set up winter camp just over the Louisiana border. Lincoln sent a newspaperman to spy on Grant that winter to see if the general was actually worthy of command–and the spy quickly became one of Grant's biggest supporters.

Grant, realizing he could probably take Vicksburg from the north, set about digging trenches and dredging new rivers that could move the troops south of the city. In April, a flotilla of Navy gunboats, under heavy fire, ran the blockade at Vicksburg to come to Grant's assistance. Now under Grant's control, McClernand and Sherman crossed the Mississippi in May, nine miles south of Vicksburg. At Champion's Hill, Grant led the forces to a strong rout of Confederate troops and isolated them.

On May 22, 1863, a daylong direct attack on the breastworks of the city failed to yield results. Grant lost 3,200 men, far more than his opponent, but his strategy began to emerge–a strategy that no other Union general could ever stomach, but one that would eventually lead to victory. Grant knew that he had more men to lose than his enemy, and was not afraid to wear down his opponents with brutal assault after brutal assault. He settled in for a siege. On July 3, 1863, another of Grant's old West Point friends, John Bowen, arrived at camp to negotiate a surrender for the city. Again, Grant offered no terms and said he would only accept "unconditional surrender." The next day–a day after the battle of Gettysburg ended in Pennsylvania–Vicksburg capitulated. After two long, bloody years, the tide had finally turned in favor of the Union side. Grant was a hero again.

That fall, Grant received another urgent summons. General Braxton Bragg had virtually surrounded the Union army at Chattanooga–the important railroad hub of the area–and isolated the Union General William Rosecrans. The situation required drastic action, so Lincoln appointed Grant head of all of the armies west of the Alleghenies, save one army in Louisiana. Grant and his wife, Julia, were summoned back to the headquarters at Cairo, Illinois, for their new assignments. Grant replaced Rosecrans, set about building a "cracker line" to deliver food to the beleaguered garrison in Chattanooga, and urged Sherman to move west to the scene with "all possible dispatch."

Although the Confederate troops slowly moved to surround Grant's army, Grant remained unconcerned. In two more days of bloody fighting, Grant broke the Confederates. On November 24, 1863, troops seized the Confederate post of Lookout Mountain, and the next day, Union troops forced the Confederates to retreat. Grant had saved defeat and pulled another stunning victory out of his hat. He then set out to help relieve Ambrose Burnside's army, which had been caught up in fighting at Knoxville. With all the Confederate forces in retreat, Grant established a new headquarters at Nashville, where his wife could live comfortably.

In Washington, Congress passed a law reestablishing the rank of Lieutenant General–a rank previously only held by George Washington himself. However, Congress and Lincoln, feeling that Grant could now save the nation again, thought him worthy of the title. In March 1864 Grant was promoted and gained control of all Union forces. The war would now be won or lost under his name.