During 1966, the American bomber offensive against North Vietnam is expanded, with regular raids against Hanoi, the capital city of the north. The idea was that the bombings would break the will of the Vietnamese people to fight. This is in spite of the failure of the mass bomber raids in the Second World War. In 1940, the German air attacks on Britain failed to defeat the British, while the even larger US-British bomber raids against Germany between 1943-45 also did not force a German surrender.

The Vietnam war enters a new phase with the Tet offensive of January 1968. The North Vietnamese army and their guerrilla allies, the Viet Cong, launch surprise attacks in Saigon, Hue and the American base of Khe Sanh. The North Vietnamese are beaten back, but the Americans are stunned by the size of the Vietnamese attack. US President Johnson begins peace talks, the so-called Paris Peace Talks, in 1969.

The newly elected President Nixon announces the beginning of the American withdrawal from the Vietnam war in 1969. At this point, the Americans had 55,000 land troops in Vietnam. However, US troops invaded Cambodia in 1970, while Laos is invaded in 1971 (Laos itself is fighting its own civil war since 1966). Huge new North Vietnamese offensive in 1972 is only stopped with massive American support to the South Vietnamese.

In January 1973, the Americans agree to a cease fire and withdraw the last of their forces. Now South Vietnam faced the north alone and suffered a string of defeats. In April 1975, the southern capital, Saigon, fell to the North Vietnamese marking the end of the war.

Cambodia maintains its neutrality during the first part of the Vietnam war. In May 1970, American and South Vietnamese troops invade Cambodia to eliminate North Vietnamese guerrilla bases that had been set up there. Prince Sihanouk, the ruler of Cambodia, is removed from power in October 1970, and the country is renamed the Republic of Khmer. Native communist guerrillas, called the Khmer Rouge, begin a civil war and in 1975 capture the capital city. The rebel Pol Pot takes power. More than 1 million people are murdered by the Khmer Rouge.

In March 1968, Suharto becomes the second president of Indonesia, the former Dutch East Indies. In 1969, the western part of New Guinea is formally annexed to Indonesia as the state of Irian Jaya. In 1973, the Portuguese colony of East Timor is invaded and captured by the Indonesian army.