In April 1941, Vannevar Bush, head of the wartime National Defense Research Committee (NDRC), created a special committee headed by Compton to report on the NDRC uranium program. Compton's report, which was submitted in May 1941, foresaw the prospects of developing radiological weapons, nuclear propulsion for ships, and nuclear weapons using uranium-235 or the recently discovered plutonium. In October he wrote another report on the practicality of an atomic bomb. For this report, he worked with Enrico Fermi on calculations of the critical mass of uranium-235, conservatively estimating it to be between  and . He also discussed the prospects for uranium enrichment with Harold Urey, spoke with Eugene Wigner about how plutonium might be produced in a nuclear reactor, and with Robert Serber about how the plutonium produced in a reactor might be separated from uranium. His report, submitted in November, stated that a bomb was feasible, although he was more conservative about its destructive power than Mark Oliphant and his British colleagues.
The final draft of Compton's November report made no mention of using plutonium, but after discussing the latest research with Ernest Lawrence, Compton became convinced that a plutonium bomb was also feasible. In December, Compton was placed in charge of the plutonium project. He hoped to achieve a controlled chain reaction by January 1943, and to have a bomb by January 1945. To tackle the problem, he had the research groups working on plutonium and nuclear reactor design at Columbia University,  Princeton University and the University of California, Berkeley, concentrated together as the Metallurgical Laboratory in Chicago. Its objectives were to produce reactors to convert uranium to plutonium, to find ways to chemically separate the plutonium from the uranium, and to design and build an atomic bomb.
In June 1942, the United States Army Corps of Engineers assumed control of the nuclear weapons program and Compton's Metallurgical Laboratory became part of the Manhattan Project. That month, Compton gave Robert Oppenheimer responsibility for bomb design. It fell to Compton to decide which of the different types of reactor designs that the Metallurgical Laboratory scientists had devised should be pursued, even though a successful reactor had not yet been built.
When labor disputes delayed construction of the Metallurgical Laboratorys new home in the Argonne Forest preserve, Compton decided to build Chicago Pile-1, the first nuclear reactor, under the stands at Stagg Field. Under Fermis direction, it went critical on December 2, 1942. Compton arranged for Mallinckrodt to undertake the purification of uranium ore, and with DuPont to build the plutonium semi-works at Oak Ridge, Tennessee.
A major crisis for the plutonium program occurred in July 1943, when Emilio Segrès group confirmed that plutonium created in the X-10 Graphite Reactor at Oak Ridge contained high levels of plutonium-240. Its spontaneous fission ruled out the use of plutonium in a gun-type nuclear weapon. Oppenheimers Los Alamos Laboratory met the challenge by designing and building an implosion-type nuclear weapon.
Compton was at the Hanford site in September 1944 to watch the first reactor being brought online. The first batch of uranium slugs was fed into Reactor B at Hanford in November 1944, and shipments of plutonium to Los Alamos began in February 1945. Throughout the war, Compton would remain a prominent scientific adviser and administrator. In 1945, he served, along with Lawrence, Oppenheimer, and Fermi, on the Scientific Panel that recommended military use of the atomic bomb against Japan. He was awarded the Medal for Merit for his services to the Manhattan Project.