Despite a pre-war reputation for being sympathetic to the South, Sanders remained loyal to the Union. He was promoted to first lieutenant on May 10, 1861. Four days later he was raised to the rank of captain. On August 2, 1861, the 2nd U.S. Dragoons was renamed the 6th U.S. Cavalry, in which he participated in the Peninsula Campaign and the Battle of Antietam. After Antietam, Ambrose Burnside gave him a command in the Department of the Ohio, resulting in his transfer to Cincinnati, Ohio. On March 4, 1863, Sanders was appointed colonel of the 5th Kentucky Cavalry Regiment.