Bayer's dazzling development was interrupted by the First World War. The company was largely cut off from its major export markets, and sales of dyes and pharmaceuticals dropped accordingly. Bayer was increasingly integrated into the war economy and began to produce war materials, including explosives and chemical weapons. In 1917, during the war, Bayer launched its third production site in Dormagen.
The effects of the war were devastating. The company lost most of its foreign assets and the export markets – upon which the company's further development depended – remained largely inaccessible. Bayer's Russian subsidiary was expropriated as a result of the Russian Revolution. The company's U.S. assets, including its patents and trademarks, were confiscated in 1917 and auctioned off to its competitors. Sales in 1919 amounted to only two thirds of the 1913 figure. Inflation exhausted Bayer's financial reserves, and in 1923 Bayer did not pay a dividend – for the second time in its history after 1885.
Thanks to the constructive cooperation between management and the employees' representatives, Bayer made it relatively smoothly through the uneasy years following the defeat in World War I from the November Revolution until the stabilization of Germany in 1923/24.