Within a year, he was commanding an active service unit in south County Londonderry during the Border Campaign, where his leadership skills and burning down of the courthouse in Magherafelt earned him the nickname of "the Boy General".

He helped found a strong tenants' association in Bray, and also became involved with the credit union movement and various farmers' organisations.

During this period he married a woman, Maeliosa Gaynor from Rapla near Nenagh, County Tipperary,[7] who also became active in the republican movement.

At a private meeting later the same day, the Irish National Liberation Army was formed with Costello as the Chief of Staff, although its existence was to be kept secret for a time.

Within days of its founding, the fledgling Irish Republican Socialist Movement was embroiled in a bitter feud with the Official IRA.

In July 1976 Costello was replaced as INLA chief-of-staff by South Londonderry man Eddy McNicholl, although he still wielded considerable influence within the movement, retaining his position as chairman of the IRSP.

Despite the truce, Costello was shot dead with a shotgun as he sat in his car on Northbrook Avenue, off the North Strand Road in Dublin on 5 October 1977 allegedly by a member of the Official IRA, Jim Flynn, who happened to be in the area at the time.

However, the INLA eventually deemed Flynn the person responsible, and he was shot dead in June 1982 in the North Strand, Dublin, very close to the spot where Costello died.

At the time of his death, he was a member of the following bodies: as well as still holding the positions of His funeral was attended by Ruairí Ó Brádaigh, the then president of Sinn Féin, Michael O'Riordan of the Communist Party of Ireland, Bernadette McAliskey and local Wicklow TDs Liam Kavanagh (Labour), Ciarán Murphy (Fianna Fáil) and Godfrey Timmins (Fine Gael).