While the Lincoln Administration and most Northerners were preoccupied with trying to capture Richmond in the summer of 1861, it would be the little known Ulysses S. Grant who delivered the Union's first major victories, over a thousand miles away from Washington. Grant's new commission led to his command of the District of Southeast Missouri, headquartered at Cairo, after he was appointed by "The Pathfinder", John C. Fremont, a national celebrity who had run for President in 1856. Fremont was one of many political generals that Lincoln was saddled with, and his political prominence ensured he was given a prominent command as commander of the Department of the West early in the war before running so afoul of the Lincoln Administration that he was court-martialed.

In January of 1862, Grant persuaded General Henry "Old Brains" Halleck to allow his men to launch a campaign on the Tennessee River. As soon as Halleck acquiesced, Grant moved against Fort Henry, in close coordination with the naval command of Flag Officer Andrew Hull Foote. The combination of infantry and naval bombardment helped force the capitulation of Fort Henry on February 6, 1862, and the surrender of Fort Henry was followed immediately by an attack on Fort Donelson on the Cumberland River, which earned Grant his famous nickname "Unconditional Surrender". Grant's forces enveloped the Confederate garrison at Fort Donelson, which included Confederate generals Simon Buckner, John Floyd, and Gideon Pillow. In one of the most bungled operations of the war, the Confederate generals tried and failed to open an escape route by attacking Grant's forces on February 15. Although the initial assault was successful, General Pillow inexplicably chose to have his men pull back into their trenches, ostensibly so they could take more supplies before their escape. Instead, they simply lost all the ground they had taken, and the garrison was cut off yet again.

During the early morning hours of February 16, the garrison's generals held one of the Civil War's most famous councils of war. Over the protestations of cavalry officer Nathan Bedford Forrest, who insisted the garrison could escape, the three generals agreed to surrender their army, but none of them wanted to be the fall guy. General Floyd was worried that the Union might try him for treason if he was taken captive, so he turned command of the garrison over to General Pillow and escaped with two of his regiments. Pillow had the same concern and turned command over to General Buckner before escaping alone by boat.

With no attempt to conceal his anger at the cowardice displayed by his commanding officers, Forrest announced, "I did not come here to surrender my command!" He then proceeded to round up his own men and rallied hundreds of men before leading them on a daring and dramatic escape under the cover of darkness through the icy waters of Lick Creek to escape the siege and avoid capture.

Despite all of these successful escapes, General Buckner decided to surrender to Grant, and when asked for terms of surrender, Grant replied, "No terms except an unconditional and immediate surrender." In addition to giving him a famous sobriquet, Grant's campaign was the first major success for the Union, which had already lost the disastrous First Battle of Bull Run in July 1861 and was reorganizing the Army of the Potomac in anticipation of the Peninsula Campaign (which would fail in the summer of 1862). It also exposed the weakness of the outmanned Confederates, who were stretched too thin across the theater.