A coup d'état by Mátyás Rákosi, deputy premier and leader of the Communist Party, forced Nagy to resign and go into exile in the United States in June 1947.

Nagy was born into family of middle-level peasants in the small town of Bisse, and started his political career writing news articles as a self-taught man.

He entered Parliament in 1939, and was involved in anti-war and anti-Nazi activities during Hungary's participation in World War II on the side of the Axis powers.

Nagy was named speaker of the new parliament while Tildy became the new Prime Minister, and both became members of the High National Council which served as Hungary's provisional collective head of state.

[4] Inheriting a war-ravaged country, his government oversaw the beginnings of reconstruction, including solving a world-record rate of hyperinflation by replacing the Hungarian pengő with the forint in August 1946.

[5] This was done with the help of the United States, when in June 1946 President Harry Truman had agreed with Prime Minister Nagy to return gold reserves captured by the US at the end of the war, without which stabilization would have been impossible.

This began in March 1946 with the formation of a "Left Bloc" including the Communists, Social Democrats, and National Peasant Party, opposed to the majority Smallholders on almost every issue and intending to create political deadlock to force its own agenda.

Nagy was accused by many fellow Smallholders of weakness in resisting these demands, but his ultimate goal was to appease the Communists until a peace treaty could be negotiated and their Soviet sponsors withdrew.

[8] From early 1947 the Communist Party under then-Deputy Premier Mátyás Rákosi increased its attacks on the Smallholders, accusing their leaders of complicity in a vast alleged conspiracy.

Nagy documented his life and political career in The Struggle behind the Iron Curtain, published by MacMillan in 1948, and royalties from his memoirs helped him buy a house with a substantial garden plot in Herndon, Virginia (then an exurb of Washington, D.C.).