In 1957, the U.S. Supreme Court ordered his reinstatement in a unanimous decision and found that Acheson's action had been illegal because "it violated Regulations of the Department of State which were binding on the Secretary.

Service was first assigned to a clerkship position in the American consulate in the capital of Yunnan province, Kunming.

During the early war years, Service wrote increasingly-critical reports on the Kuomintang, led by Chiang Kai-shek.

"[5] His reports caught the attention of John P. Davies, a Foreign Service Officer working as a diplomatic attaché to General Joseph Stilwell.

Because the invasion of Japan was planned to launch from China, there was great interest in enlisting support from all Chinese factions.

Service wrote a series of reports over the next four months that praised Mao and the Chinese Communist Party, and described its leaders as "progressive" and "democratic.

However, a grand jury declined to indict Service and found that the materials were not sensitive and were of a kind commonly released to journalists.

In March 1950, he was ordered from his ship docked in Yokohama to return to Washington, DC, where he would answer charges leveled against him.

FBI surveillance recorded that Service met with Amerasia editor Philip Jaffe on April 19, 1945 at the Statler Hotel: "Service, according to the microphone surveillance, apparently gave Jaffe a document which dealt with matters the Chinese had furnished to the United States government in confidence.

Former ambassador to China, Clarence Gauss testified later during the McCarthy era: In Chungking, Mr. Service was a political officer of the Embassy.... His job was to get every bit of information that he possibly could... he would see the foreign press people.

"[11] Eventually, FBI investigators broke into the offices of Amerasia, and found hundreds of government documents, many labeled "secret."

Five years after Amerasia, on March 14, Senator Joseph McCarthy accused Service of being a Communist sympathizer in the State Department.

Service was cleared of the charges by the Senate Foreign Relations Subcommittee on the Investigation of Loyalty of State Department Employees, also known as the Tydings Committee.

However, a final review board found "reasonable doubt" as to Service's loyalty, and Secretary of State Dean Acheson ordered his dismissal.

In the "Red Scare" turmoil of the early 1950s, John P. Davies, and other diplomats were blamed for the fall of China to the Communists and were forced out of the State Department.

[16] In The Amerasia Spy Case: Prelude to McCarthyism, the authors Harvey Klehr and Ronald Radosh state, "Any lingering doubts about Service's true position are erased by the evidence of the FBI surveillance.

"[17] Jonathan Mirsky, in his review in the Wall Street Journal of the 2009 biography of Service by Lynne Joiner states, "In two phone interviews with me shortly before he died a decade ago, Service admitted that in the 1940s he had given Jaffe a top-secret document revealing the Nationalist Order of Battle, which showed the exact disposition of the forces facing Mao's troops."

"[18] Lynne Joiner, the biographer, responded to these allegations in a letter to the editor: "I conducted extensive interviews with Service during the last year of his life and he never mentioned this to me or to others who knew him well."

In 1971, preceding President Richard Nixon's visit to China, Service was one of a handful of Americans invited back to the country, as relations with the US were normalized.

[22] The scenarios that Service envisioned in his reports from Dixie Mission about the Communists' future management of China were rose–colored or incomplete.

Service hoped that the Communists would adopt free market and democratic reforms if they were pushed in the right direction with US support.

Tuchman forecast that the "inflexible verdict of history" would be that if American policy makers had heeded Service's advice in the 1940s both Asia and America could have been spared "immeasurable, and to some degree irreparable, harm.

"[24] The story of the Dixie Mission was the basis for a World War II novel, Two Sons of China (Bondfire Book, 2013) by Andrew Lam, in which Service is a prominent figure.