On the Bogd Khan’s death, the limited monarchy lapsed, but the new MPR government obstructed the search for a reincarnation of the Javzandamba. By 1929 the government had instituted an official ban on recognizing any reincarnations. The 1920s were marked by violent swings in the MPRP’s policies. In 1924–28 the party leadership pursued “Get rich!” policies that later were described as “right opportunism,” which were countered after a change in leadership by a period of “left deviation.” The leftists soon began setting up herding communes on property expropriated from landlords and monasteries. These actions precipitated a series of insurrections that were finally suppressed by April 1932. Shortly thereafter, however, the Comintern decided that the Mongolian revolution had been progressing too rapidly and was not yet at the socialist stage of development, and the MPRP adopted more moderate policies—a trend that became known as the “new turn.”

The MPRP congress held in October 1934 drew attention to a new threat to Mongolia: that from Japan. In 1927 Tanaka Giichi, then the Japanese prime minister, had called for a policy of Japanese expansion in East Asia. Japan already had established a strong presence in Manchuria, on Mongolia’s eastern border, when on Sept. 18, 1931, the Japanese Kwantung Army staged the Mukden Incident as a pretext for occupying the city of Mukden (now Shenyang). Japanese troops soon occupied all of Manchuria, and in 1932 Japan established the puppet state of Manchukuo there. In 1933 Japan annexed Jehol province—situated on the border of Inner Mongolia and now divided between Hebei and Liaoning provinces—outright and claimed Outer Mongolia (i.e., the MPR) as part of Manchukuo. Mongolian and Kwantung Army troops clashed at Lake Buir on Mongolia’s eastern border in 1935, prompting the Soviet and Mongolian governments to sign a mutual aid protocol in March 1936, in which they agreed to support one another in the event of attack. The Nationalist government in China protested this pact as being contrary to Chinese claims of suzerainty over Mongolia. In 1937 Japan annexed Chahar province (now in Inner Mongolia), on Mongolia’s southeastern border, and then, following the Marco Polo Bridge Incident near Beijing (July 7), went to war with China.

The uncertainty, both internal and external, posed by the Japanese threat engendered political hysteria that developed into wholesale arrests and executions on charges of counterrevolutionary activity and spying for the Japanese. Khorloogiin Choibalsan, minister of internal affairs, with the help of the Soviet NKVD (secret police), had tens of thousands of innocent victims rounded up, who were forced to admit their “guilt” and then were executed. After Soviet leader Joseph Stalin pointed out that there were many more Buddhists than MPRP members in Mongolia, most of the country’s monasteries and temples were destroyed, their treasures stolen, and their lamas shot or put to forced labour. Prominent Mongolians eliminated during the period of purges included two prime ministers, Peljidiin Genden (served 1932–36) and Anandyn Amar (1936–39), who after their arrest in Mongolia were tried in Moscow and executed (in 1937 and 1941, respectively) for “counterrevolutionary crimes”; Marshal Gelegdorjiin Demid, commander in chief of the army, who died of food poisoning while traveling on the Trans-Siberian Railway in August 1937; and Darizavyn Losol and Dansrangiin Dogsom, two veteran revolutionaries arrested in 1939 and sent to the Soviet Union, where Losol died in 1940 awaiting trial and Dogsom was executed in 1941.

Mongolia’s slow collision with Japan escalated into a series of battles after the Japanese and Manchukuo troops invaded the northeastern corner of Mongolia in 1939. The fighting reached its climax in August, when Mongolian and Soviet troops under the command of Soviet Gen. Georgy Zhukov annihilated a large Japanese force near the Khalkhyn (Halhïn) River on the Mongolia-Manchukuo border. Japan subsequently abandoned any plans to invade the Soviet Union and shifted the focus of its expansionist efforts to the Pacific and Southeast Asia during World War II (1939–45).

Choibalsan, who in addition to serving as minister of internal affairs had become minister of war in 1937, was appointed the country’s prime minister in March 1939. The MPRP congress held in March 1940 declared the beginning of the socialist stage of Mongolia’s political development and named Yumjaagiin Tsedenbal general secretary of the party. Mongolia remained isolated from the outside world, recognized only by the Soviet Union, its political mentor and economic prop. Although Mongolia’s health and education services had been greatly improved with Soviet help during the previous decade, industrial development was still in its infancy. The only major economic projects of the 1930s were a wool-washing factory set up at Lake Khövsgöl, a narrow-gauge railway line constructed between Ulaanbaatar and the nearby Nalaikh coal mine, and a complex of factories established at Ulaanbaatar that processed agricultural produce and made building materials.

In a major cultural change, it was agreed at a conference in Moscow in 1931 to create Latin scripts for the Mongol, Buryat, and Kalmyk languages. The plan was quickly implemented, with rules devised, publishing organized, teaching scheduled, and regulations issued. Official use began in 1933. However, Stalin later changed his mind; the Latin script was abandoned; and modified Cyrillic alphabets were ordered. The Cyrillic alphabet for Mongol was introduced in 1945, and the traditional Mongolian vertical script was abandoned.

As World War II engulfed Europe, Japan signed a neutrality pact with the Soviet Union (April 1941). Two months later Nazi leader Adolf Hitler launched the German invasion of the Soviet Union, and Mongolia gave its Soviet ally moral support, material assistance (foodstuffs, livestock, and winter clothing), and later money to finance a tank regiment and a fighter squadron. At the Yalta Conference in February 1945, it was agreed that the Soviet Union would enter the war against Japan in exchange for recovering territory in the Far East previously lost to Japan and the understanding that the status quo in Mongolia’s “independent” status (i.e., Soviet control) would be preserved. The Soviet Union and Mongolia declared war on Japan in early August and entered Inner Mongolia and Manchuria. By the time Japanese resistance had collapsed on August 22, Mongolian units had advanced southward beyond the Great Wall.