President Abraham Lincoln appointed him the Judge Advocate General of the United States Army.

The Buchanan administration was shaken in December 1860 and January 1861, when the Confederacy was formed and many cabinet members resigned, but Holt was both against slavery and strongly for the Union.

Supported by his close ally Attorney General Edwin M. Stanton, he was appointed Secretary of War upon the resignation of John B. Floyd of Virginia, who joined the Confederacy.

When Lincoln took office, Holt returned to Kentucky and worked successfully to keep the state out of the Confederacy.

Kentucky was virtually neutral until Confederate units invaded in September 1861, and the Unionist element took control.

He crafted the argument to the Supreme Court in Ex Parte Vallandigham,[5] By the time he joined the Army, he believed that the only means to prevent treason from occurring again was to ensure that slavery was abolished for all time, and eventually equal treatment under the law enforced in the South.

He personally prosecuted the court-martial against Major General Fitz John Porter for crimes of disobedience of a lawful order and misbehavior in front of the enemy.

According to University of New Mexico, School of Law Professor Joshua E. Kastenberg, Holt engaged in political activities that were important for the Union's war efforts, but would not be constitutionally permissible today.

Holt also used the Army's power to suppress newspapers as well as oversee the arrest and trial of Congressman Benjamin Gwinn Harris of Maryland who "uttered treasonous statements" in the House of Representatives.

Booth's accomplice, Lewis Powell seriously injured Secretary of State Seward, and Vice President Johnson was also targeted.

Holt prepared an order for the signature of Johnson for the arrest of Confederate President Jefferson Davis and five other suspects.

In 1866, Holt issued a pamphlet, titled Vindication of Judge Advocate General Holt From the Foul Slanders of Traitors, Confessed Perjurers and Suborners, Acting in the Interest of Jefferson Davis, in which he attempted to defend himself against the various allegations and clear up some of the confusion stemming from the trial.