In an attempt to halt the rapid Japanese expansion southward, which threatened Australia's marine communication lines, American troops occupied the Anglo-French New Hebrides Condominium in early 1942.

At first, the Americans used the colonial authorities as middlemen during the hiring process as they had previously done with Solomon Islands Labour Corps and the Australian New Guinea Administrative Unit.

However frequent disagreements between the French and the British in combination with complaints from the laborers regarding the quality of the food they were served, prompted the Americans to assume control.

[2] Once the labor resources of Efate had been exhausted recruits started coming from Tanna, Ambae and smaller islands eventually swelling the unit's numbers to 10,000 men.

[2] While the recruits had to build their own huts for accommodation, other necessities such as food, clothing, dogtags, medical care and cigarettes were provided for them by the American military.

The mass participation of Ni-Vanuatu men in the Labor Corps had a significant effect on the John Frum movement, giving it the characteristics of a cargo cult.