With the onset of the American Revolution, the College of William and Mary all-but shut down. Barely eighteen years old, Monroe left school in January 1776 to join his countrymen in fighting English oppression. He joined the Continental Army under the command of General George Washington outside New York City; his first position was as a lieutenant in the third Virginia regiment, commanded by Colonel Hugh Mercer.

War would quickly prove its brutality to the young officer. In Monroe's first major engagement, just outside Harlem, his commanding officer fell mortally wounded and the company received a commendation for turning back the British troops. Soon thereafter, after a defeat at White Plains, Monroe's regiment moved to Newark, New Jersey to support Fort Lee–which soon fell. Washington's army retreated further into the state. Monroe served as part of the rear guard and so watched as Washington's entire army passed before him. Monroe counted barely three thousand soldiers. He later commented, however, that he never saw a stronger man than General Washington, "A deportment so firm, do dignified, so exalted, but yet so modest and composed, I have never seen in any other person."

After gathering his troops, Washington decided to take advantage of the fact that the British thought they had thoroughly defeated the American army: He would launch a counterattack at Trenton. Washington staged a surprise attack the day after Christmas against the Hessian forces at Trenton–with the Third Virginia at the lead. After the regiment's commanding officer fell, Monroe stepped forward to bravely lead the attack through the city streets. He was stopped, however, by a musket ball that entered through his breast and exited through his shoulder. Although Washington's army was victorious at Trenton, and a week later staged an equally important victory against regular British troops at Princeton, Monroe missed the rest of the campaign recuperating from his wound. Despite the fact that Monroe could have received compensation for his wound, he eschewed all such rewards–beginning a life-long habit of refusing to claim money owed him by the government; by the time he finally got around to claiming his funds nearly half-a-century later, it would almost be too late.

While passing up the money, Monroe did accept a promotion to the position of captain in reward for his bravery. Major General Lord Stirling invited Monroe to become his aide-de-camp and it was serving in that position that Monroe came to know someone who would become one of his closest friends: The Marquis de Lafayette, a colorful and adventurous French nobleman who had chartered a ship to sail himself and other "adventurers" to fight the British in America.

As aide-de-camp, Monroe saw the battles of Brandywine, Monmouth and Germantown in the fall of 1777 and passed the winter at Valley Forge. Meanwhile, despite their underdog status, the American army was succeeding. General John Burgoyne surrendered his army of British regulars after the battle of Saratoga, a key turning point in the war that convinced the French government that the Americans stood a chance of winning. The French eventually entered into a military alliance that would spell the downfall of the British. The Continental Congress continued to push ahead with forming a new government and in the fall of 1777 passed the Articles of Confederation, an ambitious yet flawed document outlining a new government. Another key turning point came when the German mercenary Friedrich von Steuben arrived at Valley Forge in February 1778 and began an intense training regimen to ensure an adequate fighting force.

Meanwhile, Monroe longed for a command of his own. The duties of an aide-de- camp, even one with the rank of colonel which Monroe had finally achieved, were few and far between. The ambitious soldier, not even twenty-one years old, wanted to be giving orders not carrying them from one commander to another. However, the war had exhausted the meager resources of the American colonies and he found himself unable to raise a new regiment, despite letters of support from Washington and other Continental leaders. The Virginia legislature chartered a new regiment for him with the rank of lieutenant colonel, but he could not find anyone to fill it. He was mustered out of the service and saw only brief action again in the south as a volunteer.

Monroe returned to Virginia, where he was to study law under a Virginian who had made quite a name for himself authoring the Declaration of Independence: Thomas Jefferson. Monroe's studies with Jefferson would begin a life-long friendship and tutelage that helped Monroe develop intellectually.