On 19 March, Hungary received notification of the new demarcation line and demilitarized zone from French Lieutenant Colonel Fernand Vix (the "Vix note"). The Károlyi government would not accept the terms and this was a trigger for the coup d'état by Béla Kun, who formed the Hungarian Soviet Republic.
On 21 March, Béla Kun led a successful communist coup d'état. Károlyi was deposed and arrested. Kun formed a social democratic, communist coalition government and proclaimed the Hungarian Soviet Republic. Days later the Communists purged the Social Democrats from the government.
A demilitarized zone was to be created, extending from the new demarcation line to 5 kilometres (3.1 mi) beyond the line. The demilitarized zone represented the extent of Romanian territorial requests on Hungary. The retreat of the Hungarian army behind the western border of the demilitarized zone was to begin on 22 March.
On 4 April, South African General Jan Smuts was sent to Hungary. He carried the proposition that the Hungarian communist government under Kun abide by the conditions previously presented to Károlyi in the Vix note. Smuts' mission also represented official recognition of the Kun communist government by the Allied council.
The Hungarians retreated to Szolnok and from there across the Tisza River. They established two concentric defense lines extending from the Tisza River around Szolnok. Between 29 April and 1 May, the Romanian Army broke through these lines.
On 2 May, Hungary sued for peace via a request delivered by his representative, Lieutenant Colonel Henrik Werth. Kun was prepared to recognize all of Romania's territorial demands; requested the cessation of hostilities; and asked for ongoing control of Hungarian internal affairs.
On 3 June, Romania was forced into further retreat but extended its line of defence along the Tisza River and reinforced its position with the 8th Division, which had been moving forward from Bukovina since 22 May.
The Allied council demanded that Romania leave Tiszántúl and respect the new borders. Romania said it would only do so after the Hungarian Army demobilized. Kun said he would continue to depend on the might of his army. On 11 July, the Allied council ordered Marshal Ferdinand Foch to prepare a coordinated attack against Hungary using Serb, French and Romanian forces. Hungary, in turn, prepared for action along the Tisza River.
On 20 July, in the northern arena, the Hungarians army took Rakamaz and some nearby villages. Troops of the Romanian 16th and 2nd Vânători divisions took back the villages shortly and regained Rakamaz the next day. The Hungarians renewed their efforts and, supported by artillery fire, retook Rakamaz and two nearby villages but could not break out of the Rakamaz bridgehead.
On 20 July, Hungarian forces established a solid bridgehead on the east bank of the Tisza at Szolnok, opposed by the Romanian 91st Regiment of the 18th Infantry Division. The Hungarian army moved the 6th and 7th divisions across the Tisza River, formed up within the bridgehead, then attacked the Romanians in the first line of defense. The Hungarian 6th Infantry Division took Törökszentmiklós; the 7th Division advanced towards Mezőtúr and the 5th Division advanced towards Túrkeve.
On 21–22 July, Hódmezővásárhely changed hands several times between Hungarian and Romanian troops of the 90th Infantry Regiment supported by the 1st Vânători Brigade. On 23 July, Romanian forces reoccupied Hódmezővásárhely, Szentes and Mindszent.
On 24 July, the Romanian 20th Infantry Division, brought in as reinforcements, cleared the bridgehead at Tiszafüred. Not being able to break out of Rakamaz, Hungarian forces fortified their positions and redeployed some troops. There was a lull in fighting in the north, as the Romanian troops did the same.
On 24 July, the Romanian Army's northern maneuver group attacked. Elements of the 2nd Cavalry Division, supported by troops of the 18th Infantry Division, took Kunhegyes. The Romanian 1st Infantry Division attacked the Hungarian 6th Infantry Division and took Fegyvernek. The Romanian 6th Ddivision was less successful, being counterattacked on the left flank by the Hungarian reserve formations. Altogether, the attack pushed back the Hungarian army 20 kilometres (12 mi). Romanian forces were supported by the 2nd Vânători Division and some cavalry units when they became available.
On 25 July, fighting continued. Hungarian forces counterattacked at Fegyvernek, engaging the Romanian 1st Infantry Division. With their lines breaking, Hungarian troops began a retreat towards the Tisza River bridge at Szolnok.
After repelling the Hungarian attack, the Romanian army prepared to cross the Tisza River. From 27–29 July, the Romanian Army tested the strength of the Hungarian defense with small attacks. A plan was made to cross the Tisza River near Fegyvernek, where it makes a turn.
On the night of 29–30 July, the Romanian Army crossed the Tisza River. Decoy operations were mounted at other points along the river, bringing intense artillery duels. Romanian forces held the element of surprise.
Until midday on 4 August, 400 Romanian soldiers with two artillery guns held Budapest. Then the bulk of the Romanian troops arrived in the city and a parade was held through the city center in front of the commander, General Moşoiu. Romanian forces continued their advance into Hungary and stopped at Győr. As of 8 August, the Romanians had captured 1,235 Hungarian officers and 40,000 soldiers, seized 350 guns—including two with a caliber of 305 mm—332 machine guns, 52,000 rifles and 87 airplanes.