The defeat of the South Vietnamese Army of the Republic of Vietnam (ARVN) in a battle in January 1963 set off a furious debate in the United States on the progress being made in the war against the Viet Cong (VC) in South Vietnam. Assessments of the war flowing into the higher levels of the U.S. government in Washington, D.C. were wildly inconsistent, some citing an early victory over the VC, others a rapidly deteriorating military situation. Some senior U.S. military officers and White House officials were optimistic; civilians of the Department of State and the Central Intelligence Agency (CIA), junior military officers, and the media were decidedly less so. Near the end of the year, U.S. leaders became more pessimistic about progress in the war.

Although the U.S. denied that it had combat soldiers in South Vietnam, U.S. soldiers routinely participated in combat operations against the VC. The number of U.S. soldiers in South Vietnam rose to more than 16,000 by year's end with 122 combat deaths in just that year.

The President of South Vietnam Ngô Đình Diệm initiated a brutal crack-down on protests by Buddhists against his (largely Roman Catholic) government that caused consternation in the U.S. and concern that the Diệm government was failing. In November, Diệm was overthrown and killed in a coup d'état by his military, with the tacit acquiescence of the United States. A military junta headed by General Dương Văn Minh replaced Diệm. United States President John F. Kennedy was assassinated three weeks later. Lyndon Johnson became President of the United States. Johnson did not make any major changes in Kennedy's policies or team of policy advisers on Vietnam.

January 2 January

The Battle of Ap Bac was the first major combat victory by the VC against the ARVN and U.S. forces. The battle took place near the hamlet of Ap Bac, southwest of Saigon in the Mekong Delta. Forces of the ARVN 7th Division, equipped with M113 armored personnel carriers (APCs) and artillery and supported by U.S. helicopters, confronted entrenched elements of the VC 261st and 514th Battalions. The heavily outnumbered VC killed 83 ARVN and three American advisers and shot down five helicopters for the loss of 18 killed. The VC, after several defeats in the Delta, had devised tactics to combat American helicopters and armored vehicles. U.S. Military Assistance Command, Vietnam (MACV) Commander General Paul D. Harkins declared the battle a victory for ARVN because the VC had abandoned the battlefield. American adviser Lieutenant Colonel John Paul Vann who observed and directed the battle from a small airplane, called it a "miserable damn performance" by ARVN because the VC escaped after inflicting heavy casualties.

State Department officer Roger Hilsman, who had counterinsurgency experience in World War II, said after a visit to Vietnam that "things are going much better than they were a year ago" but "not nearly so well as [General] Harkins and others might suggest." Hilsman also talked to General Edward Rowny who had accompanied the ARVN on 20 combat operations. Rowny criticized the ARVN for delaying operations while waiting for air strikes and for its indiscriminate shooting of civilians in bombed-out villages. He was also critical of the lack of United States Air Force (USAF) support for helicopter operations and the micro-management of the war by CINCPAC. He noted that many competent U.S. captains and majors "are becoming strong advocates of fewer sweep operations and more civil and political action programs."FRUS, "Memorandum for the Record by the Director of the Bureau of Intelligence and Research", 2 Jan 1963, https://history.state.gov/historicaldocuments/frus1961-63v03/d4, accessed 4 Sep 2014

9 to 11 January At the end of a visit to South Vietnam CINCPAC Admiral Harry D. Felt stated that the VC "face inevitable defeat" and the South Vietnamese were going to win the war.

14 January In his State of the Union address to Congress President Kennedy said "the spearpoint of aggression has been blunted in South Vietnam."The New York Times, January 15, 1963

19 January General Harkins presented his Comprehensive Plan for the war. He envisioned an increase in South Vietnamese forces (ARVN plus Civil Guard and Self Defense Corps) to 458,500 personnel by mid-1964 and thereafter to decrease, the war presumably winding down. Harkins foresaw that U.S. military personnel in South Vietnam would be reduced to 12,200 by mid 1965 and to 1,500 in mid 1968. MACV would be abolished by 1 July 1966.

25 January The VC blew up a passenger freight train near Qui Nhơn, killing eight passengers and injuring 15 others.

30 January Army Chief of Staff General Earle Wheeler returned to Washington after heading a delegation of senior U.S. military officers to South Vietnam. Wheeler's report was highly optimistic. "The situation in South Vietnam has been reoriented, in the space of a year and a half, from a circumstance of near desperation to a condition where victory is now a hopeful prospect." Wheeler commented that press reports about the Battle of Ap Bac had caused "great harm...Public and Congressional opinion in the United States has been influenced toward thinking that the war effort in Vietnam is misguided, lacking in drive, and flouts the counsel of United States advisers. Doubts have been raised as to the courage, the training, the determination and dedication of the Vietnamese armed forces."FRUS, 1961-1963, Vol. 3, Vietnam, January – August 1963

February 13 February U.S. Army adviser Colonel Daniel B. Porter reported to General Harkins from the field that "In many operations against areas of hamlets which are considered to be hard-core VC strongholds, all possibility of surprise is lost by prolonged air strikes and artillery bombardments prior to the landing or movement of troops into the area... The innocent women, children and old people bear the brunt of such bombardments."

March Chinese military leader Luo Ruiqing visited North Vietnam and said that China would come to its defense if the United States attacked North Vietnam.Chen Jia (June 1995), "China's Involvement in the Vietnam War, 1964-69", The China Quarterly, No. 142, p. 359

4 March Two Protestant missionaries Elwood Forreston, an American and Gaspart Makil, a Filipino, were shot dead at a VC road block between Saigon and Da Lat. Makil's twin babies were shot and wounded.

8 March In an issue of ARMY Magazine devoted to guerrilla warfare a letter to the editor explained the U.S. army's lack of attention to counterinsurgency. "The whole field of guerrilla operations was the burial place for the future of any officer who was sincerely interested in the development and application of guerrilla war. The conventionally trained officer appears to feel that guerrilla operations are beneath his dignity...

12 March Colonel Wilbur Wilson reported that the promising Buon Enao Civilian Irregular Defense Group (CIDG) project was in danger. The South Vietnamese government was confiscating weapons from the Montagnard self-defense forces created and armed by the CIA in Buon Enao. He said that "the effectiveness of the Buon Enao concept will decrease sharply throughout all the highlands" and "VC incidents will increase rapidly once the VC learn that...food, manpower, and freedom of movement can be obtained without combat." MACV did not respond positively to the concern and continued shifting United States Special Forces soldiers away from pacification projects, also called hearts and minds programs, such as Buon Enao into purely military operations against the VC. By the end of 1963, Darlac Province where Buon Enao was located had "one of the highest rates of Communist activity in the country."Harris, J. P. "The Buon Enao Experiment and American Counterinsurgency", Sandhurst Occasional Papers, No. 13, 2013, p. 40

20 March General Harkins and MACV issued a report stating that "barring greatly increased resupply and reinforcement of the Viet Cong by infiltration, the military phase of the war can be virtually won in 1963." This optimistic statement conflicted with negative assessments coming in from a large number of military advisers in the field

27 March Prime Minister Phạm Văn Đồng of North Vietnam told a Polish diplomat that a Geneva Conference should be convened to establish a neutral coalition government in South Vietnam. Đồng said that the U.S. could thus "withdraw with honor satisfied" and that the unification of North and South Vietnam would be accomplished only gradually.

April 3 April John Paul Vann departed Vietnam for an assignment in the United States. Vann met with and briefed many officers at the Pentagon about the military situation in Vietnam. He was invited to brief the Joint Chiefs of Staff (JCS) on 8 July. However, his briefing was cancelled at the last minute, apparently by the Chairman of the Joint Chiefs of Staff General Maxwell Taylor. Vann's proposed briefing to the JCS was at odds with what General Harkins was telling Washington. He planned to say that the body counts ARVN reported of VC killed were inflated and included many non-combatants and that the indiscriminate use of artillery and air strikes was alienating the Vietnamese population.

The VC threw two grenades into a variety show performance at a private school near Long Xuyen, An Giang Province, killing a teacher and two other adults.

4 April The VC threw grenades into an audience attending an outdoor motion picture showing in Cao Lanh village in the Mekong Delta, killing four persons and wounding 11.

17 April A National Intelligence Estimate by the intelligence community of the U.S. stated: "We believe that Communist progress has been blunted...The Viet Cong can be contained militarily and...further progress can be made in expanding the area of government control and in creating greater security in the countryside." CIA Director John A. McCone had rejected an earlier draft which had been far less optimistic. He directed the analysts to seek out the views of senior U.S. military and civilian policymakers, most of whom were far more optimistic. The earlier draft had read: "The struggle in South Vietnam will be protracted and costly [because] very great weaknesses remain and will be difficult to surmount." The weaknesses of the South Vietnamese government were "lack of aggressive and firm leadership at all levels of command, poor morale among the troops, lack of trust between peasant and soldier, poor tactical use of available forces, a very inadequate intelligence system, and obvious Communist penetration of the South Vietnamese military organization. The shift in the emphasis of the report from pessimistic to optimistic has been cited by CIA studies as an example of distorting intelligence to suit the political wishes of senior government officials."CIA and the Vietnam Policymakers: Three Episodes 1962-1968" , accessed 8 Sep 2014

25 April A seven person New Zealand surgical team arrived at Qui Nhon to operate on civilians at the Binh Dinh Province Hospital. The surgical team would remain there until 1975.

May China's second most important leader Liu Shaoqi visited North Vietnam. He told Ho Chi Minh and other North Vietnamese leaders that they could count on China as "the strategic rear" if the war expanded. Between 1956 and 1963, China provided about 320 million yuan (about 130 million U.S. dollars) in military assistance to North Vietnam, including arms, ammunition, trucks, planes, and ships.

The Joint Chiefs of Staff directed Admiral Harry D. Felt, to produce a plan for covert military raids in North Vietnam known as Operation Plan 34-63 (OPLAN 34–63). It would later become known as Operation 34A (OPLAN 34A).

1 May