His 1st Cavalry Division then played a crucial, costly role in the successful last-ditch defense of the Pusan Perimeter, and joined in the breakout of U.S. and South Korean units headed north in September in conjunction with the landing of U.S. forces at Inchon. Gay's troops then led the strike across the 38th Parallel and into Pyongyang, capturing the North Korean capital on October 19–20. Two weeks later, his 8th Cavalry Regiment was hit hard by newly arriving Chinese Communist forces at Unsan, north of Pyongyang, with one battalion left trapped when Gay's rescue efforts were ordered halted by his superior, I Corps commander Major General Frank W. Milburn. The Chinese drove the 1st Cavalry Division and other U.S. forces from North Korea in December, and in early 1951 Gay, along with other top officers in Korea, was relieved of his command.