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With the start of World War II, Stein fled with the Mir Yeshiva to Vilna and then to Shanghai, where he spent the remainder of the war. During this time, Stein formed a relationship with the Mashgiach, Rabbi Yechezkel Levenstein.
Stein was the only member of his family who survived the Holocaust. His parents and three brothers were killed by the Nazis during the Holocaust. After the war, he joined the remainder of the Mir yeshiva students in New York City, where the yeshiva had re-opened. For a short period, he joined a group of students who went to Cincinnati, Ohio, where Rabbi Eliezer Silver had founded a yeshiva.
Shortly after his marriage, Stein began to deliver shiurim at the Telz Yeshiva. At the time, Rabbi Stein was the only rosh yeshiva not to have studied in Telz and so his methodology and approach to Talmudic analysis were unique to the yeshiva.
In 1988, Stein's oldest son, Rabbi Shmuel Zalman, died at the age of 38. He was the author of Pri Shmuel, and delivered a shiur at the Heichal HaTorah Yeshiva in Jerusalem.
He is survived by a son, Rabbi Aaron Stein, rosh yeshiva at Or Hameir Yeshiva in Peekskill, New York. One of his daughters is married to Rabbi Yisroel Ginsburg, a rosh yeshiva at the Yeshiva of Staten Island, and the other is married to Rabbi Avraham Doweck, a maggid shiur at the Telz Yeshiva in Cleveland.
Stein's students published his Talmudic shiurim in pamphlets and other forms, among them a stenciled three-volume edition called Shiurei HaRav Pesach Stein (Lessons of Rabbi Pesach Stein). As the lectures increased, Stein responded to his students' requests and edited the pamphlets, reprinting them as a series of books called Likutei Shiurim (Collected Lessons).