With the outbreak of World War II, the battalion was called up for a month of continuous service and recruitment was stepped up as national servicemen were used to fill the ranks. During 1940–41, training camps were conducted around New South Wales at Rutherford, Greta, and Bathurst Camps. In March 1942, following the entry of the Imperial Japanese into the war, the 36th Battalion was moved to Newcastle, along with the rest of the 14th Brigade in order to defend against a possible invasion of the area. In May 1942, as the Japanese began to threat New Guinea, they returned to Greta Camp in preparation for transfer to Townsville, from where they would embark for Port Moresby. In Port Moresby, the battalion was initially employed in a garrison role, conducting long-range patrols in the Owen Stanley Range, however, as the Japanese moved further towards Port Moresby, the 36th Battalion was sent to Koitaki in September 1942 in anticipation of going into action. When the Japanese reached Nauro the battalion was sent in as a blocking force, and they patrolled the area along the track that ran south to Subitana for about week before they were moved north to Uberi where they relieved the 2/14th and 2/16th Battalions, before returning to Port Moresby on 9 October 1942. Around this time, the battalion's machine gun company was detached and in conjunction with several other Militia machine gun companies, it was used to form the 7th Machine Gun Battalion.