Against his better judgment he followed Hitler's orders to hold the Army's position in Stalingrad under all circumstances, even after his forces were completely encircled by the enemy. A relief effort by Don Army Group under Field Marshal von Manstein failed, inevitably, because Paulus was refused permission to break out of the encirclement. The 6th Army was defeated together with its Romanian allies and Russian auxiliary troops by the Red Army under General Zhukov in January 1943. The battle was fought with terrible losses on both sides and the most unimaginable suffering, scarring the Russian and German nations for several generations.

Paulus's inability or unwillingness to save his men by taking a decision against the will of Hitler to extricate the army from an impossible position puts him in an historically unfavourable light. However, he also refused to take his own life as Hitler had suggested. Paulus was expected to hold Stalingrad to the death. Hitler promoted Paulus to the rank of field marshal, after the Sixth Army's fate was sealed; since no German field marshal in history had ever surrendered, the implication was clear.

Despite this, he made a surrender (of sorts) in February 1943 and became a vocal critic of the Nazi regime while in Soviet captivity. He later acted as a witness for the prosecution at the Nuremberg trials.

He remains a controversial historic figure, due to his late conversion to the anti-Nazi cause and perceived spineless behaviour towards Hitler. He is frequently unfavourably compared with Rommel who came from a similar background of a family with no great military distinction, was also much favoured by Hitler, and then forced to take cyanide by his master.

He died in East Germany, as an inspector of police.