He was captured by the British at Kilkenny in December 1920, found in possession of a handgun. Much to his disgust, he had failed to destroy some notes, which contained the names of members of the 7th West Kilkenny Brigade, all of whom were subsequently arrested. At his arrest he gave his name as "Bernard Stewart". Having been badly beaten during his interrogation at Dublin Castle and in severe danger of execution, he escaped from Kilmainham Gaol on 21 February 1921 along with IRA men Frank Teeling and Simon Donnelly, with the aid of a soldier who was also an Irish republican. O'Malley was placed in command of the IRA's Second Southern Division in Munster, and for operations in Limerick, Kilkenny and Tipperary.