Prior to the Second World War, Lae, a small town on the shores of the Huon Gulf in eastern New Guinea, was one of several servicing the rich goldfields further inland. Following the fall of Rabaul in New Britain to the Japanese in January 1942, Lae was selected as the new capital of Australian-mandated New Guinea; the establishment of necessary organisations and infrastructure was still underway when Lae too was occupied on 8 March 1942. It was subsequently developed by the Japanese as a base area as part of their defence barrier running from Timor in the west, to New Georgia in the east.
The Allies began planning for the recapture of Lae in July 1942, as part of a larger operation to occupy the Huon Peninsula and thereby close-down the vital Vitiez and Dampier Straits between New Guinea and Rabaul. The concept that developed for the capture of Lae was in the nature of a pincer - an amphibious force would land east of the town and then advance upon it along the coast and an airborne force would be flown into Nadzab in the Markham Valley and advance on Lae from the west. The ongoing operations west of Salamua would also continue with the aim of diverting Japanese attention from Lae.
The 9th Australian Division landed east of Lae on 4 September, and, although demonstrating a degree of inexperience as far as amphibious landings were concerned, quickly established its beachhead and began the advance on Lae. Nadzab airstrip was captured by a parachute landing by the 503rd United States Parachute Regiment on 5 September and, after work by the 2/2nd Pioneer Battalion and 2/6th Field Company that had advanced overload, began to receive the first transports carrying the 7th Division on 7 September. The landward advance on Lae began on 11 September. The two arms of the pincer made rapid progress, and the operation developed into a race for Lae by the two Australian divisions. They both reached Lae on 16 September although the troops of the 7th had the honour of being first into the town. Around 1,500 Japanese were killed in the operation and another 2,000 taken prisoner, but close to 6,500 managed to escape, despite the 21st Australian Brigade being moved into positions to block their path. The 9th Division suffered 150 fatal casualties in the operation and the 7th 38 in the actual fighting and 59 in aircraft accident, involving the 2/33rd Battalion, at Port Moresby.
Lae was subsequently developed by the Allies as a major base. Today Lae is the site of the second-largest Commonwealth War Graves cemetery in Papua New Guinea. 2,359 Australians are buried there, and another 348 with no known grave are commemorated on the Memorial to the Missing.