On April 21, 1945, Inouye was grievously wounded while leading an assault on a heavily-defended ridge near San Terenzo in Tuscany, Italy called Colle Musatello. The ridge served as a strongpoint along the strip of German fortifications known as the Gothic Line, which represented the last and most unyielding line of German defensive works in Italy. As he led his platoon in a flanking maneuver, three German machine guns opened fire from covered positions just 40 yards away, pinning his men to the ground. Inouye stood up to attack and was shot in the stomach; ignoring his wound, he proceeded to attack and destroy the first machine gun nest with hand grenades and fire from his Thompson submachine gun. After being informed of the severity of his wound by his platoon sergeant, he refused treatment and rallied his men for an attack on the second machine gun position, which he also successfully destroyed before collapsing from blood loss.

As his squad distracted the third machine gunner, Inouye crawled toward the final bunker, eventually drawing within 10 yards. As he raised himself up and cocked his arm to throw his last grenade into the fighting position, a German inside the bunker fired a rifle grenade that struck him on the right elbow, severing most of his arm and leaving his own primed grenade reflexively "clenched in a fist that suddenly didn't belong to me anymore".[10] Inouye's horrified soldiers moved to his aid, but he shouted for them to keep back out of fear his severed fist would involuntarily relax and drop the grenade. As the German inside the bunker reloaded his rifle, Inouye pried the live grenade from his useless right hand and transferred it to his left. As the German aimed his rifle to finish him off, Inouye tossed the grenade off-hand into the bunker and destroyed it. He stumbled to his feet and continued forward, silencing the last German resistance with a one-handed burst from his Thompson before being wounded in the leg and tumbling unconscious to the bottom of the ridge. When he awoke to see the concerned men of his platoon hovering over him, his only comment before being carried away was to gruffly order them to return to their positions, since, as he pointed out, "nobody called off the war!"[11]

The remainder of Inouye's mutilated right arm was later amputated at a field hospital without proper anesthesia, as he had been given too much morphine at an aid station and it was feared any more would lower his blood pressure enough to kill him.[12]

Although Inouye had lost his right arm, he remained in the military until 1947 and was honorably discharged with the rank of captain. At the time of his leaving the Army, he was a recipient of the Bronze Star Medal and the Purple Heart. Inouye was initially awarded the Distinguished Service Cross for his bravery in this action, with the award later being upgraded to the Medal of Honor by President Bill Clinton (alongside 19 other Nisei servicemen who served in the 442nd Regimental Combat Team and were believed to have been denied proper recognition of their bravery due to their race).[13] His story, along with interviews with him about the war as a whole, were featured prominently in the 2007 Ken Burns documentary The War.[14]

While recovering from war wounds and the amputation of his right forearm from the grenade wound (mentioned above) at Percy Jones Army Hospital, Inouye met future Republican presidential candidate Bob Dole, then a fellow patient. While at the same hospital, Inouye also met future fellow Democrat and Senator Philip Hart, who had been injured on D-Day. Dole mentioned to Inouye that after the war he planned to go to Congress; Inouye beat him there by a few years. The two remained lifelong friends. In 2003, the hospital was renamed the Hart-Dole-Inouye Federal Center in honor of the three WWII veterans.

Citation:

Second Lieutenant Daniel K. Inouye distinguished himself by extraordinary heroism in action on 21 April 1945, in the vicinity of San Terenzo, Italy. While attacking a defended ridge guarding an important road junction, Second Lieutenant Inouye skillfully directed his platoon through a hail of automatic weapon and small arms fire, in a swift enveloping movement that resulted in the capture of an artillery and mortar post and brought his men to within 40 yards of the hostile force. Emplaced in bunkers and rock formations, the enemy halted the advance with crossfire from three machine guns. With complete disregard for his personal safety, Second Lieutenant Inouye crawled up the treacherous slope to within five yards of the nearest machine gun and hurled two grenades, destroying the emplacement. Before the enemy could retaliate, he stood up and neutralized a second machine gun nest. Although wounded by a sniper’s bullet, he continued to engage other hostile positions at close range until an exploding grenade shattered his right arm. Despite the intense pain, he refused evacuation and continued to direct his platoon until enemy resistance was broken and his men were again deployed in defensive positions. In the attack, 25 enemy soldiers were killed and eight others captured. By his gallant, aggressive tactics and by his indomitable leadership, Second Lieutenant Inouye enabled his platoon to advance through formidable resistance, and was instrumental in the capture of the ridge. Second Lieutenant Inouye’s extraordinary heroism and devotion to duty are in keeping with the highest traditions of military service and reflect great credit on him, his unit, and the United States Army.