The islands were occupied for almost the entire war. Some people were evacuated (about 25.000), many weren't (about 66.000) and had to live five years under German rule. This is partially due to local governments fearing riots for the limited spaces on the boats and encouraging people to stay. Overall they also didn't have much time. Only shortly before the invasion Britain had given up on the islands as strategically unimportant, basically not worth fighting for. They ordered all military to leave and take all equipment with them - they demilitarized all the islands and declared them open towns without telling the local government or the Germans, which rather defeated the point of an open town.

German rule included registration of Jews, about 20 people of Jewish heritage were trapped on the islands and later had their assets seized, some were also deported. The government failed to give any clear instructions in case of an occupation, therefore the civilians were unsure how to act. Mostly people took up a position of careful neutrality to avoid risking their lives, especially in the early years of the occupation. Some resisted more actively with acts of sabotage or other forms of resistance, if caught they were usually deported to the main land. Others worked closely with the occupiers and were later branded collaborators. Overall though there was little contact between the Germans and the local populace, the latter keeping itself apart as best as they could. Reportedly the Germans also behaved well and weren't as oppressive as the propaganda had warned.

As the war progressed however, the situation got progressively worse too with confiscation of radios and forbidding British radio stations being a huge blow to morale. Even harsher was the deportation of 2,500 islanders to the mainland that had committed no crimes. They were people who weren't permanent residents of the islands and all grown men who had not been born on one of the islands along with their families. This was a direct response by Hitler to German expats in Persia being imprisoned by British and Soviet forces. The deported families were sent to interment camps in Germany and were forced to stay there until the end of the war. About 50 or so people died during their time in Germany.

The worst period on the island was the last winter before the end of the war because moral was very low and food was scarce.