At the outbreak of the Civil War Osterhaus was appointed a major of the 2nd Missouri Volunteer Infantry and during the first year of the war was employed in Missouri and Arkansas, where he took a conspicuous part in the Battle of Wilson's Creek and Battle of Pea Ridge. At Pea Ridge he commanded the troops that first made contact with Confederate forces advancing on the Union left. He was promoted to brigadier general on June 9, 1862. In 1863 he commanded a division in the Battle of Port Gibson, where he displayed tactical ability in prying Confederate defenders out of a favorable position.