When Curtin took over as leader his party was still deeply divided and crippled by the Lang influence in NSW, and also by ideological differences which made any firm decision especially on foreign affairs potentially divisive. At the Federal elections in 1937, when there was a temporary truce with the Langite MPs in Parliament, Labor recovered significantly, but still held only 29 of the 74 House seats. In the following election in 1940 Lang had again divided the Labor vote, but by then the Coalition was in even worse shape, since Lyons had been replaced by Menzies, who had only grudging support from the Country Party. The election was a cliff-hanger, with the Coalition winning 36 seats, opposed by 36 for the Labor Party (if the four for Lang's State Labor party were included), plus two Independents. Menzies stayed in office, but on borrowed time.
Following Labor Party traditions, Curtin refused an offer from Menzies to join a government of national emergency to fight the war, although senior members of the party did cooperate in an Advisory War Council, which was an excellent preparation for leadership in the war. Menzies even offered to serve under Curtin in a joint government, but Curtin's instincts were that a strong single-party government was necessary, and he also had doubts about how he would manage the industrial sections of the labour movement if he were to join such a coalition. He was probably correct in that since sections of the union movement were becoming increasingly militant and anti-war. Eventually, the Menzies government collapsed, leaving a brief coalition led by the Country Party, after which the two Independents crossed the floor to install Labor. The Curtin government commenced on 7 October 1941 with a Ministry elected by Caucus, among whom Curtin distributed the portfolios. Two months later, on 7 December, the Japanese attacked Pearl Harbour, and by February Darwin was being bombed.
The Curtin Ministry brought together some very talented, but also very independently minded people. Curtin himself became Minister for Defence Coordination and, within a few months, Minister for Defence. His right hand man was Ben Chifley, who as Treasurer laid the foundations for effective management of all national resources, as well as advising Curtin on the everyday problems of national and international politics that were so burdensome to the Prime Minister. Dr HV Evatt had the two crucial Ministries of Attorney-General and Foreign Affairs. While Evatt was personally unpredictable, and occasionally critical of the government, he was a strong support to Curtin. A surprise member of Cabinet was Jack Beasley, who in 1931 had helped destroy the Scullin government. He was given the senior portfolio of Supply and Development, which became the centre of mobilisation of the manufacturing industries for the war effort. His rehabilitation in the party began when he, along with other Langites, rejoined the federal party in 1935, and was reinforced in 1941 when he persuaded Lang himself to rejoin the ALP (which was merely a brief interlude for Lang). Thereafter Beasley abandoned any alliance with Lang. His greatest value to the government was probably his unsurpassed contacts in the trade union movement that Curtin needed in his difficult relationship with many unions in wartime.
Another key Minister was John Dedman, a dour Scotsman who had been a member of the Country Party in the 1920s, but later radicalised by the Depression. He was Minister for War Organisation of Industry, as well as Minister for the Council for Scientific and Industrial Research (later the CSIRO). In effect, Dedman was the Minister for rationing, and gained the nickname of 'Lumbago Jack' because, with clothing in short supply, he allegedly deprived men of their waistcoats. There was no disagreement with the need for rationing, and Dedman was at least given the credit for administering the system with fairness to all.
After the disastrous result of the 1935 NSW election, which Lang lost comprehensively, while effectively brushing aside a challenge from Federal Labor, Lang's supporters started to abandon him. In August 1939 the Federal Executive intervened in the branch to sponsor a Unity Conference which returned to Caucus its right to appoint and dismiss its leaders. Caucus met soon after and elected William McKell as leader. McKell was able to sweep to power in NSW, beginning a 24-year period of office for a moderate brand of Labor. NSW had returned to being the heartland of Australian Labor. For the immediate future, a Curtin government knew that it could rely upon a moderate and efficient NSW Labor government to face the challenges of war. For the Federal ALP the successful intervention confirmed the authority of the Federal Executive.