At the start of the Civil War, Letterman was assigned to the Army of the Potomac. He was named medical director of the Department of West Virginia in May 1862. A month later William A. Hammond, Surgeon General of the U.S. Army appointed him, with the rank of major, as the medical director of the Army of the Potomac itself. Letterman immediately set to reorganizing the Medical Service of the fledgling army, having obtained from army commander Maj. Gen. George B. McClellan a charter to do "whatever necessary" to improve the system. The army reeled from inefficient treatment of casualties in the Seven Days Battles in June, but by the time of the Battle of Antietam in September, Letterman had devised a system of forward first aid stations at the regimental level, where principles of triage were first instituted. In other words, Letterman instituted standing operating procedures for the intake and subsequent treatment of war casualties and was the first person to apply management principles to battlefield medicine. He established mobile field hospitals to be located at division and corps headquarters. This system was connected by an efficient ambulance corps, established by Letterman in August 1862, under the control of medical staff instead of the Quartermaster Corps. Letterman also arranged an efficient system for the distribution of medical supplies.