At outbreak of the American Civil War, he was living in Philadelphia, and working for the Baltimore and Ohio Railroad.

He left his position there and moved to Wheeling to take command of the 1st Virginia Infantry, a Federal volunteer three-months regiment, and was appointed as its colonel.

He was promoted to brigadier general of volunteers on August 5, 1861, backdated to May, and was victorious at Romney and Blue's Gap (Hanging Rocks Pass).

In 1862 he served under Maj. Gen. John C. Frémont, and the following year he was in command of the West Virginia department and pursued General Robert E. Lee during the Retreat from Gettysburg.

[3] Kelley, along with his immediate superior Maj. Gen. George Crook, was captured by a small raiding party of Confederate partisans on February 21, 1865.