In September 1940, Rabi became a member of the Scientific Advisory Committee of the U.S. Army's Ballistic Research Laboratory. That month, the British Tizard Mission brought a number of new technologies to the United States, including a cavity magnetron, a high-powered device that generates microwaves using the interaction of a stream of electrons with a magnetic field. This device promised to revolutionize radar, so Alfred Lee Loomis of the National Defense Research Committee decided to establish a new laboratory at the Massachusetts Institute of Technology (MIT) to develop this radar technology. The name Radiation Laboratory was chosen as both unremarkable and a tribute to the Berkeley Radiation Laboratory. Loomis recruited Lee DuBridge to run it.
Loomis and DuBridge recruited physicists for the new laboratory at an Applied Nuclear Physics conference at MIT in October 1940. Among those who volunteered was Rabi. His assignment was to study the magnetron, which was so secret that it had to be kept in a safe. The Radiation Laboratory scientists set their sights on producing a microwave radar set by January 6, 1941, and having a prototype installed in a Douglas A-20 Havoc by March. This was done; the technological obstacles were gradually overcome, and a working US microwave radar set was produced. The magnetron was further developed on both sides of the Atlantic to permit a reduction in wavelength from 150 cm to 10 cm, and then to 3 cm. The laboratory went on to develop air-to-surface radar to detect submarines, the SCR-584 radar for fire control, and LORAN, a long-range radio navigation system. At Rabi's instigation, a branch of the Radiation Laboratory was located at Columbia, with Rabi in charge.
In 1942 Robert Oppenheimer attempted to recruit Rabi and Robert Bacher to work at the Los Alamos Laboratory on a new secret project. They convinced Oppenheimer that his plan for a military laboratory would not work, since a scientific effort would need to be a civilian affair. The plan was modified, and the new laboratory would be a civilian one, run by the University of California under contract from the War Department. In the end, Rabi still did not go west, but did agree to serve as a consultant to the Manhattan Project. Rabi attended the Trinity test in July 1945. The scientists working on Trinity set up a betting pool on the yield of the test, with predictions ranging from total dud to 45 kilotons of TNT equivalent (kt). Rabi arrived late and found the only entry left was for 18 kilotons, which he purchased. Wearing welding goggles, he waited for the result with Ramsey and Enrico Fermi. The blast was rated at 18.6 kilotons, and Rabi won the pool.