Following the Axis invasion of Yugoslavia during the World War II and establishment of the Independent State of Croatia (Nezavisna Država Hrvatska, NDH) in April 1941, the HSS remains largely passive, following instructions of its president Vladko Maček.

At the same time, the Communist Party of Yugoslavia (Komunistička partija Jugoslavija, KPJ) and its nominally independent branch, the Communist Party of Croatia (Komunistička partija Hrvatske, KPH) launch Partisan resistance.

Thus Gaži became the president of the HSS executive committee, as well as the vice-president of the State Anti-fascist Council for the National Liberation of Croatia (Zemaljsko antifašističko vijeće narodnog oslobođenja Hrvatske, ZAVNOH) established by the KPH as the supreme representative body in Croatia, and vice-president of the National Committee for the Liberation of Yugoslavia.

It was formally renamed the Croatian Republican Peasant Party and used to politically weaken Maček-led HSS.

The HRSS remained a political ally of the KPH after the war and Gaži was elected a member of the Croatian Sabor and of the Yugoslav Parliament.