In 1861, Pegram was commissioned as a captain in the corps of cavalry. However, he was promoted rapidly to the rank of lieutenant-colonel. In the summer of 1861, he served in western Virginia, entrusted with the command of one of the two bodies of Confederate forces, he served in the Battle of Rich Mountain. After two days, he was compelled to surrender with half his command. He was exchanged, and returned to the army with the rank of colonel. In November 1862, he received a promotion to brigadier general, after which he served at the Battle of Murfreesboro, and later, at the Battle of Chickamauga. He was transferred to the Army of Northern Virginia, in command of an infantry brigade. He led his brigade through the Battle of the Wilderness. In command of Early's division, he took part in the Shenandoah valley campaign in the fall of 1864. After the Battle of Opequon, he succeeded in command of his division. After the return of these forces to Richmond area, he continued in command of the division throughout the winter. At the Battle of Hatcher's Run, Virginia, in February 1865, he was struck in the heart with a minie ball.
