During the Japanese occupation, the best graduates of the military academy were evacuated to Europe and Australia by the Dutch to undergo further education and missions. However, Iswahyudi, who was evacuated to Australia, felt dissatisfied and returned to Dutch East Indies by rubber boat. After the Proclamation of Independence in 1945, Iswahyudi helped the people of Surabaya to defend the city. He secured airplanes and Japanese weapons, which had been taken to Tanjung Perak. Afterward, Iswahyudi joined Tentara Keamanan Rakyat Jawatan Penerbangan (Flight Service of People's Security Forces; modern day Indonesian Air Force) in Yogyakarta.