Tarakan's 5,000 civilians had endured Japanese occupation since January 1942. The island's two oilfields, which had produced 80,000 barrels per month before the war, were the reason Japan had seized it. By early 1944, Japanese engineers had pushed production to 350,000 barrels monthly. But the war tide turned. The last Japanese tanker left Tarakan in July 1944. Heavy Allied air raids later that year wrecked the oil facilities and storage tanks. Hundreds of Indonesian civilians may have been killed in those raids. The large Japanese garrison consumed the island's food supply, pushing civilians into malnutrition. Six hundred Javanese laborers had been brought from Java and treated brutally. Approximately 300 Javanese women arrived after receiving false offers of clerical and tailoring work, then were forced into prostitution. By 1945, Tarakan had become a place of suffering for nearly everyone on it, occupier and occupied alike.

General Douglas MacArthur assigned the Borneo landings to Australian forces as Operation Oboe, arguing that the campaign would reclaim Dutch territory, capture oil resources, and give Australia a meaningful combat role in the war's final phase. The Australian government had been pressing MacArthur to use its idle I Corps, whose two veteran divisions had been out of action since early 1944. Senior Australian Army officers doubted the operation was worth the blood. Prime Minister John Curtin withheld the 6th Division entirely. Tarakan was designated Oboe 1, the opening move. The 26th Brigade, detached from the 9th Division, drew the assignment: a formation with formidable experience, blooded in North Africa and New Guinea. Supported by Matilda tanks, 25-pounder artillery, commandos, and nearly 12,000 troops in total, the brigade group outnumbered Tarakan's known defenders several times over.

The Allies made no attempt at surprise. Starting April 12, air and naval bombardments pounded Tarakan for weeks, destroying every Japanese aircraft in the area and forcing much of the civilian population inland. At least 100 civilians were killed or wounded. On April 30, the 2/4th Commando Squadron landed on undefended Sadau Island off Tarakan's west coast, the first time Australian soldiers had set foot on non-Australian territory in the Pacific since late 1941. Engineers of the 2/13th Field Company then cleared 125 yards of beach obstacles under Japanese fire, completing the job without a single casualty. The main assault came at 8 a.m. on May 1. The 2/23rd Battalion waded through deep mud at Green Beach while the 2/48th landed on firmer ground at Red Beach and quickly secured pillboxes and oil storage tanks. By nightfall the beachhead stretched 2,800 yards along the shore and 2,000 yards inland. Eleven Australians were killed and 35 wounded, lighter than expected. But the beach conditions were appalling: vehicles bogged in soft mud, seven LSTs ran aground and were not refloated for twelve days.

Capturing the airstrip took until May 5. The real fight was in Tarakan's interior, where roughly 1,700 Japanese troops had dug into a network of steep, densely forested hills protected by booby traps and mines. The jungle was so thick that Matilda tanks could rarely spearhead attacks, confined instead to roads and tracks where they provided supporting fire. At the Helen feature southeast of town, about 200 Japanese defenders halted the 2/3rd Pioneer Battalion for four days. On May 12, Corporal John Mackey single-handedly charged and captured three machine-gun posts before being killed. He was posthumously awarded the Victoria Cross. During this fighting, B-24 Liberator heavy bombers were used for close air support for the first time, with P-38 Lightnings following immediately with napalm drops, a combination that became the standard Australian tactic. During the first week, 7,000 Indonesian refugees streamed through Australian lines, many in poor health, overwhelming the small Dutch civil affairs unit. Most welcomed the Australians as liberators.

The Japanese garrison was gradually ground down. On June 14, the survivors abandoned their hill positions and withdrew north. A Japanese officer sent 112 Chinese and Indonesian laborers into Australian lines with a note asking that they be well treated. Radio Tokyo announced Tarakan's fall on June 15. Meanwhile, RAAF engineers of No. 61 Airfield Construction Wing had spent eight weeks trying to rebuild the airstrip. Pre-invasion bombing had cratered it, and the marshy terrain turned repair into a nightmare requiring extensive Marston Mat steel planking. The strip finally opened on June 28, too late for Brunei, too late for Labuan, barely useful for Balikpapan. The 26th Brigade Group suffered more than twice the casualties of the 9th Division's other two brigades in North Borneo. The debate over whether the campaign was a justified liberation or a meaningless sideshow has never been resolved. Remnants of the Marston Mat remain at Tarakan's airport, a quiet monument to an operation whose greatest achievement may have been the courage of the soldiers who fought it.