In late 1941 he returned to Europe to take part in Operation Barbarossa, commanding Infantry Regiment No. 76 in the charge Eastwards into the Soviet Union, for which he received the Knight's Cross in January 1942. From April to May 1942 he briefly commanded the 254th Infantry Brigade, before being appointed to the command of the 8th Jaeger Division in mid-1942 on the Eastern Front. In October 1942 he was promoted to the rank of major-general. From November 1942 he commanded the 16th Panzer Grenadier Division on the Eastern Front (being promoted to the rank of lieutenant-general in June 1943), being involved in the fighting around Stalingrad, and subsequently being awarded the Oak Leaves and also the Swords of the Iron Cross (personally presented by Adolf Hitler at a ceremony in the Berghof on Schwerin's arrival back in Germany) for his handling of the Division during the retreat from Russia whilst harried continually by overwhelming pursuing Soviet forces.