At the beginning of the American Civil War in 1861, the house was the site of the killing of Col. Elmer E. Ellsworth during the Union Army's takeover of Alexandria.

Ellsworth, a young Illinois lawyer who was a friend of the Lincoln's and founder of the 11th New York Volunteer Infantry Regiment known as the "Fire Zouaves", was killed at the Marshall House on May 24, 1861 (the day after Virginia's secession was ratified by referendum) during the Union Army's take-over of Alexandria.

[3][4][5] Before crossing the Potomac River to take Alexandria, soldiers serving under Ellsworth's command observed the flag from their camp through field glasses and volunteered to remove it.

Once inside, they encountered a man dressed in a shirt and trousers, of whom Ellsworth demanded what sort of a flag it was that hung upon the roof.

[7][8][9] Ellsworth's body was taken back across the Potomac to Washington, D.C. and was laid in state in the East Room at the White House.

[3][11][14] After the war ended, the Marshall House served as a location for a series of small businesses, but still attracted tourists from both the North and the South.

[13] In 1999, sociologist and historian James W. Loewen noted in his book Lies Across America that the Sons of Confederate Veterans had placed a bronze plaque on the side of a Holiday Inn that had been constructed on the former site of the Marshall House.

[16] Adam Goodheart further discussed the incident and the plaque (which was then within a blind arch near a corner of a Hotel Monaco) in his 2011 book 1861: The Civil War Awakening.

[17] The plaque called Jackson the "first martyr to the cause of Southern Independence" and said he "was killed by federal soldiers while defending his property and personal rights ... in defence of his home and the sacred soil of his native state".

Not in the excitement of battle, but coolly and for a great principle, he laid down his life, an example to all, in defence of his home and the sacred soil of his native state.

[4] The New York State Military Museum and Veterans Research Center in Saratoga Springs now holds in its collections most of the flag, as well as Ellsworth's uniform.

[22] The Smithsonian Institution's National Museum of American History in Washington, D.C. holds in its collections a fragment of the flag, a blood-stained piece of oilcloth and a scrap of red bunting that remain from the encounter at the Marshall House.