In 1861, Stone received the rank of inspector general of DC militia due to his status as a veteran of the Mexican War. In May 1861 he was appointed colonel of the Fourth Regular Infantry. In May 1861 he was appointed brigadier general in command of a brigade in the Shenandoah Valley during First Manassas, and Ball's Bluff. However, in February 1862 he was arrested as a scapegoat for Ball's Bluff and released without explanation. In August 1862, after nine months posted to the Department of the Gulf, he resigned from service in the U.S. Army.