This article re-evaluates an important yet usually ignored episode in modern Chinese ethnopolitical history. It seeks to argue that, in the midst of the Second World War, Chiang Kai-shek manoeuvred towards a possible war with Tibet in order to serve other military, strategic and political purposes, namely, to insert his direct control into China's south-western border provinces that were still in the firm grip of obstinate warlords. Chiang Kai-shek's careful manipulation of the Sino-Tibetan border crisis in 1942–43 also reveals how he and his top military advisors perceived wartime China's territoriality and border defence in south-west China. With considerations of regime security and national survival foremost in their minds, top KMT leaders took a pragmatic stance towards the intractable issue of Chinese sovereignty over Tibet. In addition, at the diplomatic level, the Sino-Tibetan border crisis brought discord among the Allied Nations. The Chinese regarded Tibet as part of China whereas the British had long considered it within their sphere of influence. Eventually the Chinese won the sympathy of the US government. Facing Sino-British disagreement over Tibet's political status, the State Department continued to recognize Nationalist Chinese authority in Tibet, however fictitious that authority was. In retrospect, this episode, along with the US government's official stance towards China's sovereignty over Tibet, although a only a minor disagreement between the Allied Nations during the war, led to the problematic Tibetan issue that still haunts the international community today.