The Japanese occupied the town and surrounding area on January 1, 1943. During the war, Lt. General Hatazo Adachi, commander of Japanese XVIII Army briefly had his HQ at Madang. Also the 20th and 41 Division of the Japanese Army were stationed in Madang.

There are some interesting WWII sites in Madang and along the North Coast Road and in Alexishafen. These bases were bypassed by American forces, and not invaded until much later when Australian 15 and 21 Brigades and 7th Division recaptured Madang on April 25, 1944, and Alexishafen on April 26, 1944. The coastal waters around this area of the north coast contain several shipwrecks and sunken planes.

Inland is Dumpu, the base from where the attack on Shaggy Ridge was launched by Australians. The Finnesteire Mountain between Madang and Lae was where many Japanese died of starvation and disease while fleeing from battles to the south. Some of the Papuan people who live in these areas are almost small enough to be termed pygmies, and their highland homes are in some of the roughest country in PNG.