In the War of Independence (1919–21, he was an IRA officer in the 3rd Cork Brigade (West Cork). He served under Tom Barry in one of the unit's best known action, the Crossbarry Ambush in March 1921. His younger brother, Pat, died in action at the Kilmichael Ambush in November 1920, an engagement which Liam Deasy himself was not present at.
He opposed the Anglo-Irish Treaty which ended the war. In the months that followed, he along with others like Éamon de Valera and Liam Lynch tried to persuade Michael Collins to re-negotiate aspects of the Treaty, especially to remove an oath to the King from the constitution of the new Irish Free State. When fighting broke out in Dublin, in June 1922, between pro and anti-Treaty forces, Deasy sided with the anti-treaty IRA in the ensuing Irish Civil War, however, he was reluctant to fight his former comrades and voiced the opinion that the fighting should have ended with the Free State seizure of the Four Courts.
In late July, he commanded 1500 anti-Treaty fighters who held a line around Kilmallock south of Limerick city against about 2000 Free State troops under Eoin O'Duffy. Deasy's men were the most experienced IRA fighters of the 1919-21 war and they held their position until 8 August, when they were outflanked by seaborne landings on the southern coast of Ireland. Deasy's men then dispersed. He went on the run in the southeast of the country.
In August 1922, he was in command of a band of republican guerrillas in west Cork, when they heard that Free State leader Michael Collins was in the area. Deasy had his men prepare an ambush for Collins' convoy at Béal na Bláth, for when they returned on the same route they had set out on. Deasy and most of his men did not take part in the ambush as they had retired to a nearby pub, assuming that they had missed Collins. However, Collins arrived as the last of Deasy's men were clearing the mine and barricade that had been erected on the road at Béal na Bláth. Collins was killed in the ensuing firefight. Deasy later wrote in his memoirs that he profoundly regretted the death of his former commander in chief. However, it is not clear that he gave orders otherwise to take on prisoners as the main intention of the ambush.
In January 1923, he was captured by Free State forces near Clonmel and sentenced to death. He then signed a document ordering the men under his command to surrender themselves and their arms to the government and for this he was spared execution. Republicans denounced him as a traitor and a coward for this action but Deasy argued in his book, "Brother against Brother", that he was opposed to continuing the civil war anyway and would have called on republicans to surrender whether or not he had been captured.
He died in 1974.
- Liam Deasy, Brother against Brother
- Edward Purdon, the Irish Civil War 1922-23.