On 1942, it was the beginning of Japanese invasion of the Philippines. The town suffered greatly during the Japanese occupation of the Philippines, unlike its neighbor Davao, which fared well and continued its economic growth during that time. The local recognized guerrillas and the military troops of the Philippine Commonwealth Army units continued to attack the Imperial Japanese forces. On 1945, combined Filipino and American troops including recognized guerrillas fought the Japanese and liberated the town. The general headquarters of the Philippine Commonwealth Army and Philippine Constabulary was active from 1945 to 1946 and was located in the town. After the war, most of the inhabitants of Santa Cruz moved to Davao in search of economic opportunities; despite this, the town continued its population and economic growth, though at a slower rate.