Main article: Second Indochina War

The Geneva Conference of 1954 ended France's colonial presence in Vietnam and temporarily partitioned the country into 2 states at the 17th parallel (pending unification on the basis of internationally supervised free elections). Ngô Ðình Diệm, a former mandarin with a strong Catholic and Confucian background, was selected as Premier of Bảo Đại's State of Vietnam. While Diệm was trying to settle the differences between the various armed militias in the South, Bảo Ðại was persuaded to reduce his power. Diệm used a referendum in 1955 to depose Bảo Đại and declare himself as President of the Republic of Vietnam (South Vietnam). The Republic of Vietnam (RVN) was proclaimed in Saigon on October 22, 1955. The United States began to provide military and economic aid to the RVN, training RVN personnel, and sending U.S. advisors to assist in building the infrastructure for the new government.

Also in 1954, Vietminh forces took over North Vietnam according to the Geneva Accord. Two millions North Vietnamese civilians emigrated to South Vietnam to avoid the imminent Communist regime. At the same time, Viet Minh armed forces from South Vietnam were also moving to North Vietnam, as dictated by the Geneva Accord. However, some high ranking Viet Minh cadres secretly remained in the South to follow the local situation closely. The most important figure among those was Lê Duẩn.

The Geneva Accord had promised elections to determine the government for a unified Vietnam. However, as only France and Viet Minh (Democratic Republic of Vietnam) had signed the document, the United States and Ngô Đình Diệm's government refused to abide by the agreement, fearing that Hồ Chí Minh would win the election due to his war popularity, and would establish Communism in the whole of Vietnam. Ngô Đình Diệm took some strong measures to secure South Vietnam from perceived internal threats. He eliminated all private militias from the Bình Xuyên Party and the Cao Đài and Hòa Hảo religious sects. He kept a tight lid on revolutionary parties emigrating from the North, causing one of their leaders and famous writer, Nguyễn Tường Tam to commit suicide while awaiting trial in jail. Diệm also acted aggressively to root out Communist agents still remaining in the South. He formed the Cần Lao Nhân Vị Party, mixing Personalist philosophy with labor rhetorics, modeling its organization after the Communist Party, although it was anti-Communist and pro-Catholicism. Another controversial policy was the Strategic Hamlet Program, which was effective in fencing the Communists out of the villages, yet became unpopular as it limited the villagers' freedom and altered their traditional way of life.

In 1960, at the Third Party Congress of the Vietnamese Communist Party (renamed Labor Party on the surface since 1951), Lê Duẩn arrived from the South and strongly proposed the use of revolutionary warfare to topple Diệm's regime, unifying the country, and build Marxist-Leninist socialism. Despite some elements in the Party opposing the use of force, Lê Duẩn won the seat of First Secretary of the Party. As Hồ Chí Minh was aging, Lê Duẩn virtually took the helm of war from him. The first step of his war plan was coordinating a rural uprising in the South (Đồng Khởi) and forming the National Front for the Liberation of South Vietnam (NLF) toward the end of 1960. The figurehead leader of the NLF was Nguyễn Hữu Thọ, a South Vietnamese lawyer, yet the true leadership was the Communist Party hierarchy in South Vietnam. Arms, supplies, and troops came from North Vietnam into South Vietnam via a system of trails, named the Ho Chi Minh Trail, that branched into Laos and Cambodia before entering South Vietnam. At first, most foreign aid for North Vietnam came from China, as Lê Duẩn stayed distant to the "revisionist" policy of the Soviet Union under Nikita Khrushchev. However, under Leonid Brezhnev, the Soviet Union picked up the pace of aid and provided North Vietnam with heavy weapons, such as T-54 tanks, artillery, MIG fighter planes, surface-to-air missiles, etc.

Meanwhile, in South Vietnam, although Ngô Đình Diệm personally was respected for his Confucian and Catholic virtues, many of his government associates abused power and even tried to promote Catholicism over other religions. This perceived religious partiality sparked protests from the Buddhist community. The most famous case was of Venerable Thích Quảng Đức, who burned himself to death to protest. Although most Western media often wrongly reported that Thích Quảng Đức was protesting the war, and Communist propaganda tried to portray the Venerable as a patriotic fighter, his official letter to Diệm only aimed to convince the President to act impartially to all religions and to rule wisely for the sake of the countrỵ. To the Venerable, the act of self burning was not a political suicide mission but a tradition of utmost self sacrifice for the benefit of others. However, Diệm's government mishandled the issue, causing protests to spread widely. In the United States, the Kennedy administration became worried that the problems of Diệm's regime were undermining the US's anti-Communist effort in Southeast Asia. Thus, on November 1 1963, with secret blessing from the US, South Vietnamese generals led by Dương Văn Minh overthrew Ngô Đình Diệm and killed both him and his brother, Ngô Đình Nhu, who was also his official advisor.

Between 1963 and 1967, South Vietnam became extremely unstable as no government could keep power for long. The Communist-run NLF expanded their operation and scored some significant military victories. In 1965, the US, then under President Lyndon Johnson, decided to send troops to South Vietnam to secure the country and started to bomb North Vietnam, assuming that if South Vietnam fell to the Communists, other countries in the Southeast Asia would follow, in accordance with the Domino Theory. Other US allies, such as Australia, New Zealand, South Korea, Thailand, the Philippines, and Taiwan also sent troops to South Vietnam. Although the American-led troops succeeded in containing the advance of Communist forces, the presence of foreign troops, the widespread bombing over all of Vietnam, and the social vices that mushroomed around US bases upset the sense of national pride among many Vietnamese, North and South, causing many to become sympathetic to North Vietnam and the NLF.

In 1967, South Vietnam managed to have a National Assembly and Presidential election with Lt. General Nguyễn Văn Thiệu being elected to the Presidency, bringing the government to some level of stability. However, in 1968, the NLF launched a massive and surprise Tết Offensive (known in South Vietnam as "Biến Cố Tết Mậu Thân" or in the North as "Cuộc Tổng Tấn Công và Nổi Dậy Tết Mậu Thân"), attacking almost all major cities in South Vietnam over the Vietnamese New Year (Tết). NLF and North Vietnamese forces even captured the city of Huế, after which many mass graves were found with victims being executed for having relations with the South Vietnamese government or the US (Thảm Sát Tết Mậu Thân). However, at the end, the NLF forces were pushed out of all cities in South Vietnam and nearly decimated. In subsequent major offensives in later years, North Vietnamese regulars with artillery and tanks took over the fighting. In the months following the Tet Offensive, an American unit massacred civilian villagers, suspected to be sheltering Viet Cong (NLF guerillas), in the hamlet of My Lai in Central Vietnam, causing an uproar in protest around the world.

In 1969, Hồ Chí Minh passed away and wished to be cremated. However, the Communist Party embalmed his body for public display and built the Ho Chi Minh's Mausoleum on Ba Đình Square in Hà Nội, in the style of Lenin's Mausoleum in Moscow.

A historical photo of Ho Chi Minh lying in state in his mausoleum. His body is now displayed in a larger display case.Although the Tết Offensive was a catastrophic military defeat for the Việt Cộng, it was a stunning political victory as it led many Americans to view the war as unwinnable. President Richard Nixon entered office with a pledge to end the war "with honor." He normalized US relations with mainland China in 1972 (Sino-American relations) and entered into détente with the USSR. Nixon thus forged a new strategy to deal with the Communist Bloc, taking advantage of the rift between China and the Soviet Union. A costly war in Vietnam begun to appear less effective for the cause of Communist containment. Nixon proposed "Vietnamization" of the war, with South Vietnamese troops taking charge of the fighting, yet still receiving American aid and, if necessary, air and naval support. The new strategy started to show some effects: in 1970, South Vietnamese troops (ARVN) successfully conducted raids against North Vietnamese bases in Cambodia (Cambodian Campaign); in 1971, ARVN made an incursion into Southern Laos to cut off the Ho Chi Minh Trail (Operation Lam Son 719), yet the operation failed as most high positions captured by ARVN paratroopers were overrun by North Vietnamese troops; in 1972, ARVN successfully held the town of An Lộc against massive attacks from North Vietnamese regulars and recaptured the town of Quảng Trị near the DMZ during the Easter Offensive.

At the same time, Nixon was pressuring both Hanoi and Saigon to sign the Paris Peace Agreement of 1973, for American military forces to withdraw from Vietnam. The pressure to Hanoi materialized with the Christmas Bombings in 1972. In South Vietnam, Nguyễn Văn Thiệu vocally opposed any accord with the Communists, but was threatened with withdrawal of American aid.

Despite the peace treaty, the North continued the war as had been envisioned by Lê Duẩn and the South still tried to recapture lost territories. In the U.S., Nixon resigned after the Watergate scandal. South Vietnam was seen as losing a strong backer. Under U.S. President Gerald Ford, the Democratic-controlled Congress became less willing to provide aid to South Vietnam.

In 1974, South Vietnam also fought and lost the Battle of Hoàng Sa against China over the control of the Paracel Islands in South China Sea. Neither North Vietnam nor the U.S. interfered.

In early 1975, North Vietnamese military led by General Văn Tiến Dũng launched a massive attack against the Central Highland province of Buôn Mê Thuột. South Vietnamese troops previously anticipated attack against the neighboring province of Pleiku, and were caught off guard. President Nguyễn Văn Thiệu ordered the moving of all troops from the Central Highland to the coastal areas, as with shrinking American aid, South Vietnamese forces could not afford to spread too thin. However, due to lack of experience and logistics for such a large troop movement in such a short time, the whole South Vietnamese Second Corp got bogged down on narrow mountain roads, flooded with thousands of civilian refugees, and was decimated by ambushes along the way. South Vietnamese First Corp near the DMZ was cut off, received conflicting orders from Saigon on whether to fight or to retreat, and eventually collapsed. Many civilians tried to flee to Saigon via land, air, and sea routes, suffering massive casualties along the way. In early April 1975, South Vietnam set up a last ditch defense line at Xuân Lộc, under commander Lê Minh Đảo. North Vietnamese troops failed to penetrate the line and had to make a detour, which the South Vietnamese failed to stop due to lack of troops. President Nguyễn văn Thiệu resigned. The power eventually went to Dương Văn Minh.

Dương Văn Minh led the coup against Diệm in 1963. By the mid 1970s, he had leaned toward the "Third Party" (Thành Phần Thứ Ba), South Vietnamese elites who favored dialogues and cooperation with the North. Communist infiltrators in the South tried to work out political deals to let Dương Văn Minh ascend to the Presidency, with the hope that he would prevent a last stand, destructive battle for Saigon. Although many South Vietnamese units were ready to defend Saigon, and in the Mekong Delta, the ARVN 4th Corp was still intact, Duong Van Minh ordered a surrender on April 30 1975, sparing Saigon from destruction. Nevertheless, hundreds of thousands of South Vietnamese fled the country by all means: airplanes, helicopters, ships, fishing boats, barges, etc. Most were picked up by the U.S. Seventh Fleet in the South China Sea or landed in Thailand. The seaborne refugees came to be known as "boat people". In a famous case, a South Vietnamese pilot, with his wife and children aboard a small Cessna plane, miraculously landed safely without a tailhook on the aircraft carrier USS Midway.

In restrospect, during this period, North Vietnam was a Socialist state with a centralized command economy, an extensive security apparatus to carry out Dictatorship of the Proletariat, a powerful propaganda machine that effectively rallied the people for the Party's causes, a superb intelligence system that infiltrated South Vietnam (spies such as Phạm Xuân Ẩn climbed to high government positions), and a severe suppression of political opposition. Even some decorated veterans and famed Communist cadres, such as Trần Đức Thảo, Nguyễn Hữu Đang, Trần Dần, Hoàng Minh Chính, were persecuted during the late 1950s Nhân Văn Giai Phẩm events and the 1960s Trial Against the Anti-Party Revisionists (Vụ Án Xét Lại Chống Đảng) for speaking their opinions. Nevertheless, this iron grip, together with consistent support from the Soviet Union and China, gave North Vietnam a militaristic advantage over South Vietnam. North Vietnamese leadership also had a steely determination to fight, even when facing massive casualties and destruction at their end. The young North Vietnamese were idealistically and innocently patriotic, ready to commit utmost sacrifice for the "liberation of the South" and the "unification of the motherland".

South Vietnam, meanwhile, was a young state aspiring to be a democracy in Western style. It created democratic institutions such as popular elections for the National Assembly and the President, the freedom of the press, the right to protest, etc. Its economy was based on free enterprises. However, most of these institutions were rendered greatly ineffective by corrupt yet powerful politicians and high ranking military officers. Most of the technocrats that ran the government, the low ranking officers, and the soldiers were often apathetic to politics, unlike their heavily indoctrinated counterparts in the North. The political and military systems in the South were also vulnerable to Communist infiltration, while it was almost impossible to do the reverse to North Vietnam. During the existence of South Vietnam, nevertheless, South Vietnamese learned many American practices that became useful for the country even many decades later, such as in the fields of economics, business and public management, and infrastructure management. These skills would help the southern part of the country to become the "locomotive" of the national economy in many years to come.