In September of 1950, with the North Koreans believing the US/UN/ROK forces trapped, MacArthur started to withdraw Marines from Pusan. He had planned a masterstroke, a daring amphibious assault on the Korean port of Inchon, halfway up the peninsula. MacArthur planned to use Inchon as a base to attack Seoul, and from there cut off supplies to the North Korean People's Army (NKPA), which was then assaulting Pusan. This was a classic "pincer" move, intended to crush the North Koreans between the Eighth Army at Pusan and MacArthur's troops landing at Inchon, X Corps.
X Corps was 70,000 men strong, and after a close call with the typhoon Kezin, the Marines took Wolmi, an island near Inchon, with minimal casualties. By nightfall on September 15, X Corps controlled Inchon. X Corps made a dramatic push to Seoul, and by September 27, Walker's Eighth Army from Pusan met up with X Corps. The North Korean army had been decimated. On September 29, Syngman Rhee was restored to power in Seoul.
Rather than stopping at the 38th Parallel, MacArthur, with American support, sent his forces north of the dividing line. Meanwhile, Zhou Enlai, the PRC Foreign Minister, promised that the PRC would defend North Korea and send troops across the Yalu if the US crossed the 38th Parallel. On July 17, the PRC attacked the Chinese nationalist held islands of Quemoy and Little Quemoy, which Americans viewed as a staging area for an invasion of Formosa. MacArthur traveled to Formosa on July 19; still, US leaders continued to view Zhou's threats, which did not travel through official channels, as mere posturing.
On August 17, the US announced in the halls of the UN building its goal of unifying Korea. By late August, the US/UN/ROK forces were advancing further north in Korea, approaching the Chinese border. The accidental US/UN/ROK bombing of a Manchurian airfield just north of the Yalu River, which separates North Korea from Manchuria, further alarmed PRC leaders.
On October 9, MacArthur sent his forces across the 38th Parallel near Kaesong, wanting to capture Pyongyang, the North Korean capital. MacArthur even planned another amphibious assault at Wonson, which the JCS opposed. MacArthur went ahead with the Wonson landing anyway, but it proved to be unnecessary.
On October 15, Truman flew to Wake Island to meet with MacArthur. At the Wake Island Meeting, Truman tried to emphasize the importance of handling the Korean situation carefully and diplomatically. MacArthur, on the other hand, predicted that neither the USSR nor the PRC would likely come to North Korea's aid. MacArthur returned to Korea uncowed, and his forces occupied Pyongyang in a matter of days.