Weimar Republic
Upon the declaration of the Weimar Republic, Hammerstein was transferred to the Reichswehr. He served under his father-in-law, General Walther von Lüttwitz, in the staff of the Freikorps Lüttwitz in 1919 and was promoted to lieutenant colonel one year later. That year, he refused to participate in the Kapp Putsch, which was supported by Lüttwitz. He subsequently transferred to Group Command II, based in Kassel, as its chief of staff.
In 1922, he became a battalion commander in the Munich area. In 1924, he was transferred to the staff of Military District III in Berlin. In 1929, he briefly served in the Group Command I. On 1 October 1929, he was promoted to Major General and named chief of the Truppenamt, becoming the de facto chief of the General Staff. In the Weimar Republic, the renaming was necessary as the Great General Staff had been prohibited by the Allies in the Treaty of Versailles after the First World War. His predecessor was General Werner von Blomberg, who had come into conflict with the government over the possibility of a two-front war against both France and Poland, which he deemed as favorable. By contrast, Reichswehrminister Wilhelm Groener and Chancellor Heinrich Brüning preferred Hammerstein's aversion to political extremism and military risks.
Hammerstein worked out first tactical concepts for the army to provide for a sustained defence in case of an attack until the League of Nations intervened. However, in 1930, he created the first mobilization plan since 1923, which sought to triple the number of infantry divisions from seven to 21. In 1930, General Wilhelm Heye, Commander-in-Chief of the Reichswehr, retired. Now defense minister, Schleicher, with support from Brüning, made Hammerstein Heye's successor. On 1 November 1930, he assumed the post with a simultaneous promotion to General of Infantry. Hammerstein quickly created a rearmament program, demanding the formation of at least 42 divisions.
As a close friend of Kurt von Schleicher, Hammerstein repeatedly warned President Paul von Hindenburg of the dangers of appointing Adolf Hitler, the leader of the National Socialist German Workers' Party, as Reich Chancellor. In response, Hindenburg assured Hammerstein that "he would not even consider making that Austrian corporal the minister of defense or the chancellor".
However, barely four days later, on 30 January 1933, pursuant to a request by Hindenburg, Hitler formed a cabinet as Chancellor in a coalition with the German National People's Party. Because of his opposition to Hitler, Hammerstein tendered his resignation in October 1933. It was accepted in December and became effective on 31 January 1934. He was succeeded by General Werner von Fritsch.