The Axis Powers suffered a total defeat in the war, which resulted in the so-called Cold War, as the relations between the ideologically divided winner states tightened. It was to be Finland’s fate to have to fight two wars with Russia, first the Winter War 1939-1940, in which England and France would have been willing to give their support to Finland, and later the Continuation War 1941-1944, in which Germany was fighting on the side of Finland.

The cold relations between the great powers were mainly due to the intentions of Hitler’s Germany to regain her lost power and to re-establish the country’s frontiers where they had been before the First World War. There were even more far-reaching plans of expansion: first in the areas of former Austria-Hungary. Italy, with whom Germany made a so-called "steel pact", and Japan had similar plans of expansion. In 1940, these three states entered into the alliance of three powers.

For quite a long time, the great western powers, Great Britain and France, did not very actively object to the gradual German expansion, and their attempts to form an allied blockade around it were lacking energy. In August 1939, Germany and the Soviet Union managed to conclude a non-aggression pact (the Molotov-Ribbentropp Pact after the names of the Foreign Ministers). These states were totalitarian, even if they were ideologically worlds apart and each other’s worst enemies, Germany being national-socialistic, Russia communist. The secret additional minutes connected with the agreement, enabled the parties, within the frame of their spheres of interest, to spread into the territories of the states located between them without obstruction.

Through this pact, the dictator of the Soviet Union, Stalin, hoped to gain more time to make preparations, in case a great war of "the capitalistic states" should break out, and their weakening give him an opportunity for spreading the ideas of the Soviet system into larger areas. For Germany the pact gave an opportunity to crush Poland. The attack on Poland began on September 9, 1939, which also marked the beginning of the Second World War, as Great Britain and France had guaranteed the independence of Poland.

In Europe, Germany defeated Poland in a few weeks’ time, and the Soviet Union hastened to secure its interests and occupy the Polish territories east of the border of the interest sphere agreed in the pact. Germany and the Soviet Union had to, eventually, make certain adjustments to the pact, and Lithuania, for example, went over to the Soviet sphere of interest. The German attack was rapid. Differing from the strategies of the First World War, tanks and motorized troops penetrated deep into the enemy front, while attacks from air prevented the adversaries to transfer their troops and to organize their maintenance and supply. This strategy was called "Blitzkrieg", "lightning campaign".

After the Polish War, the Soviet Union continued to strengthen her sphere of influence. She made security agreements with the Baltic countries in autumn 1939 (29 September – 10 October), which gave her the right to position armed troops in bases within their territories. Negotiations with Finland in Moscow failed, as the Finns who were suspicious of Soviet intentions, did not consent to changes of the frontiers, and to the cession of the Hanko Peninsula to be used as a Russian naval base. This failure led to the Winter War between Finland and the Soviet Union 1939-1940.

The war between the western powers and Germany long remained a kind of shadow war. No big operations were undertaken on the western front. The strategic importance of northern Europe became more marked during the Finnish Winter War, and in April 1940 Hitler’s troops successfully occupied Denmark and by July 1940, also Norway. In May 1940 Germany began the lightning campaign (Blitzkrieg) in the west. The Netherlands surrendered on the 15th of May, Belgium on the 28th of May and France on the 22nd of June. England managed to evacuate most of her troops from France through the Dunkerque bridge-head. Marshal Pétain became the head of France, most of which was now under German occupation. A resistance movement, similar to that in the other occupied countries, was organized in France, and "Free France" began operations under the protection of England. Colonel (later General) Charles de Gaulle became the leader of this movement.

While Germany was advancing, the Red Army of the Soviet Union occupied the entire Baltic area in the middle of June, 1940 – Lithuania, Latvia and Estonia were annexed to the Soviet Union as socialistic republics during the summer 1940 – and, on 28 June, 1940, took possession of Bessarabia, formerly belonging to Rumania.

At the end of 1940, Italy attacked Greece, and the Balkans became the central war scene. Hitler decided to take the area under his control, and in March and April the German army occupied Yugoslavia and Greece. Taking the island of Crete was not as easy. There were bloody battles, and the parachute troops never recovered from the defeats suffered on the island.

After the war expedition to France, Hitler gave an order to prepare for an offensive against the Soviet Union. Hitler did not attempt to invade England on account of the strength of the British navy, and England could not be put down by air attacks. England won "the battle for England" in the air.

After this, the battles between England and Germany moved mainly to the sea. At the very beginning of the war, England had declared trade embargo on Germany, and in 1940 Germany did the same on the seas surrounding Great Britain. During the war, Germany built altogether approximately 1,200 submarines to be used in trade warfare. In 1943, the adversaries, however, got the upper hand of the submarines, and from 1944 onwards the allied forces had the upper hand on all the seas. During the war, submarines and other means of trade warfare destroyed a number of trading vessels equalling half of the world’s trade tonnage in 1939. The building capacity of U.S. docks was, however, sufficient to compensate for these losses, and at the end of the war in 1945, the total British and American tonnage was bigger than it had been in 1939.

The German offensive against the Soviet Union, which had been prepared in great secret (operation Barbarossa), started on the 22nd of June, 1941. Rumania, Hungary and Finland, later also Italy, had been persuaded to join in the operation. The purpose was to take the European territories of the Soviet Union as far as the Astrakan-Arkangel line, and the first stage of the attack went smoothly and rapidly. Large sections of the red army were blockaded and numerous prisoners captured. Nevertheless, Hitler’s attempts to take Leningrad and Moscow by the end of 1941 were unsuccessful, and during the winter the red army managed to reorganize their troops for counter-offensives. However, due to the blockade, the people in Leningrad had to suffer from starvation from September 1941 till January 1944. The enormous manpower resources of the Soviet Union and her ability to set the war industry in motion again in the Ural area, began to produce results in the course of the years. The material aid of the Western Powers, the so-called lend-and-lease system, helped the red army to cope with the periods of the worst material shortage. The convoys transporting this aid were the targets of the German navy and airforce on the Arctic Ocean.

The next great German offensive penetrated far into Caucasia (the River Terek) and into the city of Stalingrad on the Volga. German troops were now blockaded near Stalingrad, and they were forced to surrender on February 2, 1943. This battle marked the turning point on the eastern front. By the end of 1943, the Soviet troops advanced as far as Smolensk and Kiev. In the following year Stalin wanted the German troops expelled out of the Soviet territory, which operation the red army carried through to near completion.

The Second World War had spread to Africa in 1940. In December the troops of the British Empire prevented Italy from landing in Egypt. From time to time, the troops of the Axis States, commanded by Field Marshal Erwin Rommel, fought successful battles in the desert, until the Brits defeated the German troops in the battle of El Alamein in October and November 1942. The resistance of the Axis States in Tunisia ended in May 1943.

Despite the ideological differences, the German attack against the Soviet Union had led into cooperation between England and the Soviet Union. England had already been financially supported by the United States, which then joined the war at the end of 1941. Stalin demanded the Western Allies to open a second front in Europe, but advancing began in easier territories, first as an invasion to north Africa on the 8th of November 1942. After this operation, the Germans who were suspicious of the French, took possession of the unoccupied areas of France as well.

After the Germans had been chased out of Africa, there followed an invasion to Europe, to Sicily on 7 July, 1943. Dissatisfaction which had long been smouldering in Italy, now resulted in the withdrawal of Italy from the war. Mussolini was compelled to resign on the 25th of July. After the allies had crossed the strait of Messina, Italy concluded Armistice on the 3rd of September, 1943. Nevertheless, in September the Republic of Italy was established under the leadership of Mussolini, which partly enabled the Germans to take control over most of Italy, and the fight for Italy lasted a long time. The Allies reached Rome on the 4th of June, 1944, but northern Italy remained under German control till May 1945.

The establishment of the second front in France was successful, after the Allies managed to take the German defence by surprise in Normandy on the 6th of June, 1944. The rolling-up back of the invasion (led by general Dwight Eisenhower) was not successful. In August 1944, there followed the invasion of the Allies on the French Riviera. On 25 August, 1944 the allies marched into Paris, and at the end of the same year there were battles also in the Netherlands and Alsace-Lorraine (Elsass-Lothringen). As a result of the drawbacks in the east and west, an opposition movement arose among the Germans, with the intention to murder Hitler on the 20th of July, 1944. The opposition was crushed, and towards the end of the year Germany managed to reorganize her troops in the west for a counter-offensive in the Ardennes. After initial successes the attack died down, and there was no more energy to stage a new large-scale offensive.