The division was reformed on 27 December 1941 for the third time from remnants of the 22nd Estonian Territorial Rifle Corps. It was reformed at Sverdlovsk in the Ural MD in 1942, as an Estonian national formation, which later joined the 8th Estonian Rifle Corps of the Red Army. It took part in operations from 7 November 1942 as part of the 3rd, 1st Shock, 8th and 42nd Armies. Its first combat was the Battle of Velikiye Luki. On 1 December 1942 it was part of the 8th Rifle Corps, subordinated directly to the Kalinin Front alongside other Estonian formations. On 22 September 1944 elements of the division, along with the 45th Estonian Tank Regiment and the 952nd SU Regiment (SU-76s), formed the forward detachment of 8th Rifle Corps and liberated Tallinn, for which all three units received the name of that city as a battle honor. The 7th Estonian Rifle Division was with 1st Shock Army of the Kurland Group (Leningrad Front) in May 1945. On 28.06.1945 it became the 118th Guards Rifle Division by NKO Order № 0126.