Dillon enlisted in September 1914, being commissioned into the Royal West Kent Regiment in the early months of World War I, eventually reaching the rank of captain and serving as a company commander in the 2/4th battalion. He served during the war at Gallipoli, in the Senussi campaign in Egypt and in Palestine, where he took part in the First Battle of Gaza. Dillon was wounded during the Stalemate in Southern Palestine and was involved in the Southern Palestine Offensive and the Battle of Jerusalem in late 1917. He was transferred to the Economic Division in Cairo in late December 1917, serving there in the Intelligence Corps for the remainder of the war.