In August 1944 supporters of Lakatos and Horthy, armed with one tank, overthrew the German-installed government of Döme Sztójay.

Lakatos's military government (also called shadow-army, since they operated in complete secrecy) stopped the deportation of Hungarian Jews, with acting Interior Minister Béla Horváth ordering Hungarian gendarmes to use deadly force against any deportation effort.

The far-right Arrow Cross Party, backed by the Germans, immediately staged a coup and took full control of the government.

He was released from prison in January 1946 and thereafter appeared as a witness in war crime trials against the Arrow Cross Party and other pro-Nazi former officials before the so-called People's Tribunal of Budapest.

Following that he moved to Budapest where he worked as a book illustrator and silk painter, and lived in poor financial circumstances.