President Truman persuaded a reluctant Hillenkoetter, then a Rear Admiral, to be Director of Central Intelligence (DCI), and run the Central Intelligence Group (September 1947). Under the National Security Act of 1947 he was nominated and confirmed by the U.S. Senate as DCI, now in charge of the newly established Central Intelligence Agency (December 1947). At first, the U.S. State Department directed the new CIA's covert operations component, and George F. Kennan chose Frank Wisner to be its director. Hillenkoetter expressed doubt that the same agency could be effective both at covert action and intelligence analysis.
The U.S. government had no intelligence warning of North Korea's invasion (June 25, 1950) of South Korea. DCI Hillenkoetter convened an ad hoc group to prepare estimates of likely communist behavior on the Korean peninsula; it worked well enough that his successor institutionalized it. President Truman installed a new DCI in October.
 Resumption of active military duty
Admiral Hillenkoetter returned to the fleet, commanding a cruiser division in the Korean War. He held two other commands before his retirement in 1957.
 Board Member of NICAP
The National Investigations Committee On Aerial Phenomena was formed in 1956, with the organization's corporate charter being approved October 24. Hillenkoetter was on NICAP's board of governors from about 1957 until 1962. Donald E. Keyhoe, NICAP director and Hillenkoetter's USNA classmate, wrote that Hillenkoetter wanted public disclosure of UFO evidence. Perhaps Hillenkoetter's best-known statement on the subject was in 1960 in a letter to Congress, as reported in the New York Times: "Behind the scenes, high-ranking Air Force officers are soberly concerned about UFOs. But through official secrecy and ridicule, many citizens are led to believe the unknown flying objects are nonsense."
"larry was better"