The first important real watershed of the twentieth century was the rise of Juan Domingo Perón , a charismatic military man of relatively modest origins who had risen through the ranks during the 1930s to attain the status of colonel. The outbreak of the World War II had repercussions in Argentina, though it chose to stay neutral. A split developed in the armed forces, with one faction favouring the Allies, and another larger one, the Axis powers. Not all who favoured an allegiance with the Axis were making a straightforward pro-Nazi endorsement, however: the motives of some, probably including Perón, were underpinned by a simmering anti-Americanism. Argentina had refused to join the Pan-American defensive alliance as a result of fiercely protectionist US trade restrictions, and its military had been enraged by the US selling arms to the country's old rival, Brazil.

Perón's involvement with politics intensified after a military coup in 1943, in which the army replaced a conservative coalition government that had come to be seen as self-serving and which was veering towards a declaration for support for the Allies. Perón's role was relatively minor at first, being appointed Secretary for Labour, but he used this post as a platform to cultivate links with trade unions. During an earlier spell as military attaché in Mussolini's Italy at the outbreak of war, he'd seen for himself the political momentum that could be generated by combining dynamic personal leadership with well-orchestrated mass rallies. The popularity of Perón alarmed his military superiors, who arrested him in 1945. However, this move backfired: Perón's wife, Evita, helped to organize the mass demonstrations that secured his release, generating the momentum that swept him to the presidency in the 1946 elections. His first term in government signalled a programme of radical social and political change, upon which the reputation and myths of the man largely rest.

Certainly, Perón's brand of fierce nationalism combined with an authoritarian cult of the leader bore many of the hallmarks of Fascism. Nevertheless, he assumed power by overwhelming democratic vote, and was seen by the poor as a saviour for the labour movement. Perón's scheme involved a type of "corporatism" that offered genuine improvements to the lives of the workers but, some would say, strengthened the ability to control them for the smooth running of the capitalist system. Perón saw strong state intervention as a way of melding the interests of labour and capital, and propounded the doctrine of justicialismo , or social justice, which soon began to be identified as Peronism . His administration passed a comprehensive programme of social welfare legislation that, amongst other things, granted workers a minimum wage, paid holidays and pension schemes, and established house-building programmes. These reforms could be paid for largely due to a healthy export trade of agricultural goods to a Europe still recovering from war. Popular support was mobilized through mighty trade unions like the General Confederation of Labour (CGT). He also supported nationalization and industrialization , in an attempt to render Argentina less dependent on foreign capital and less vulnerable to the depressions that periodically hit major European and American markets. One of the most significant acts of his administration was, in 1947, to nationalize the country's railway system, compensating its British owners to the tune of £150 million. In so doing, he also capitalized on a popular anti-British sentiment, which had been fostered over preceding generations by the disproportionate commercial influence wielded by the tiny class of British farming and industrial oligarchs. Nevertheless, some believe that he paid over the odds for outdated stock.

Controversy surrounds many other aspects of the regime too, and the man still has a great capacity to polarize opinion in Argentina. Dissident opinion had no place in his scheme: these years were marked by a suppression of the free press , increasingly heavy-handed control over institutions of higher education and the use of violent intimidation. He stifled political dissent by allowing only official unions, and inculcated a type of "industrial caudillismo ", whereby strict loyalty to the party was the unwritten expectation for the gains apportioned to the masses. Though it is unclear to what extent he was personally involved, Perón's apparent willingness to provide a haven for Nazi refugees has also cast a blemish on his, and his country's, reputation. Adolf Eichmann was one of the most notorious war criminals to find refuge here and, much more recently, Erich Priebke was extradited from Bariloche to Italy for atrocities committed in wartime Rome. A recent report has revealed that fewer Nazis actually fled to Argentina than the popular imagination suspects though, listing the number as 180, most of whom were Croats, not Germans.