President George Washington recalled Wayne from civilian life in order to lead an expedition in the Northwest Indian War, which up to that point had been a disaster for the United States. Many American Indians in the Northwest Territory had sided with the British in the Revolutionary War. In the Treaty of Paris that had ended the conflict, the British had ceded this land to the United States. The Indians, however, had not been consulted, and resisted annexation of the area by the United States. The Western Indian Confederacy achieved major victories over U.S. forces in 1790 and 1791 under the leadership of Blue Jacket of the Shawnees and Little Turtle of the Miamis. They were encouraged and supplied by the British, who had refused to evacuate British fortifications in the region as called for in the Treaty of Paris.
Washington placed Wayne in command of a newly formed military force called the "Legion of the United States". Wayne established a basic training facility at Legionville to prepare professional soldiers for his force. Wayne's was the first attempt to provide basic training for regular U.S. Army recruits and Legionville was the first facility established expressly for this purpose.
Wayne dispatched a force to Ohio to establish Fort Recovery as a base of operations, at the exact location of St. Clair's Defeat. The provocative fort became a magnet for military skirmishes in the summer of 1794. Wayne's army continued northward, building strategically defensive forts ahead of the main force. On August 3, 1794, a tree fell on Wayne's tent. He survived, but was rendered unconscious. By the next day, he had recovered sufficiently to resume the march to the newly built Fort Defiance. On August 20, 1794, Wayne mounted an assault on the Indian confederacy at the Battle of Fallen Timbers, in modern Maumee, Ohio (just south of present-day Toledo), which was a decisive victory for the U.S. forces, ending the war. Wayne then continued to Kekionga, where he oversaw the construction of Fort Wayne.
Wayne then negotiated the Treaty of Greenville between the tribal confederacy and the United States, which was signed on August 3, 1795. The treaty gave most of what is now Ohio to the United States, and cleared the way for that state to enter the Union in 1803.
Wayne died of complications from gout on December 15, 1796, during a return trip to Pennsylvania from a military post in Detroit, and was buried at Fort Presque Isle (now Erie, Pennsylvania) where the modern Wayne Blockhouse stands. His body was disinterred in 1809 and, after the body was boiled to remove the remaining flesh, as many bones as possible were placed into two saddlebags and relocated by his son Isaac Wayne to the family plot in St. David's Episcopal Church cemetery in Radnor, Pennsylvania. A legend says that many bones were lost along the roadway that encompasses much of modern U.S. Route 322, and that every January 1 (Wayne's birthday), his ghost wanders the highway searching for his lost bones