After the invasion, occupation and dismantling of the Kingdom of Yugoslavia by the Axis powers on 6 April 1941, the Wehrmacht placed Serbia proper, the northern part of Kosovo (around Kosovska Mitrovica) and the Banat under a military government.

[2] The division was formed in late 1941 following the invasion initially from German-speaking Danube Swabian Selbstschutz in the Banat autonomous area within the Territory of the Military Commander in Serbia.

Its troops were issued with a significant amount of non-standard German weapons and used captured equipment such as Czechoslovak machine guns like the ZB-53[7] and French light tanks.

The operation was aimed at the destruction of the Rasina Corps of the Yugoslav Army in the Fatherland, commanded by Major Dragutin Keserović, whose headquarters was located in the village of Kriva Reka.

[9] In early October 1942, the division was deployed in southwestern Serbia, in Kraljevo, Užice, Ivanjica, Čačak, Raška, Kosovska Mitrovica, and Novi Pazar.

[10] However, Keserović ordered his units to regroup into smaller squads for easy maneuvering and penetration, and the Rasina Corps was able to escape from the Axis ring entrapment.

In Operation Weiss I, the division advanced from Karlovac area against the Yugoslav National Liberation Army (NOVJ) resistance and on January 29 captured informal partisan capital Bihać.

From 15 May – 15 June, the Prinz Eugen took a part in the subsequent Fifth anti-Partisan Offensive (Operation Schwarz) aiming to pin Tito's main force of about 20,000 Partisans against the Zelengora mountain, in south-eastern Bosnia.

After the main group of the Partisans headed by the 1st Proletarian Division broke out of the encirclement, two battalions of the division that were moved to cover the left bank of the Sutjeska river and block the Partisans' escape route were surprised by the attack of three battalions of the NOVJ 1st Dalmatian Strike Brigade and one from 5th Montenegro Brigade at Tjentište pushing them back.

In sixteen-days long battle the division pushed back NOVJ units and on September 29 reoccupied Split, forcing the resisting Italians to surrender.

This defence was essential for the success of Army Group E efforts to open a corridor which would allow the retreat of 350,000 German soldiers from Greece and the Aegean Sea.

In the beginning of November, the very understrength and underperforming 21st Waffen Mountain Division of the SS Skanderbeg was disbanded, following widespread demoralisation and mass desertions within its ranks.

There it surrendered to the Yugoslav People's Army on 11 May,[18] three days after the capitulation of Germany that marked the official end to World War II in Europe.

The killings, which were never punished, were ordered by local Yugoslav commanders, apparently acting directly against Tito's strict instructions to detain the captives in prison camps and screen them for war criminals.

[21] Many of the soldiers' family members were amongst the tens of thousands of local civilians who perished at the hands of Yugoslav forces during the ethnic cleansing of German-speaking populations throughout eastern Europe.

[26] On 6 August 1946, during the morning session at the Nürnberg Trials, it was said that "The 7th SS Division, Prinz Eugen, is famed for its cruelty," and that "wherever it passed - through Serbia, through Bosnia and Herzegovina, through Lika and Banija or through Dalmatia - everywhere it left behind scenes of conflagration and devastation and the bodies of innocent men, women, and children who had been burned in the houses.