On April 21, 1945, Inouye was grievously wounded while leading an assault on a heavily-defended ridge near Terenzo called Colle Musatello. The ridge served as a strongpoint along the strip of German fortifications known as the Gothic Line, which represented the last and most dogged line of German defensive works in Italy. As he led his platoon in a flanking maneuver, three German machine guns opened fire from covered positions just 40 yards away, pinning his men to the ground. Inouye stood up to attack and was shot in the stomach; ignoring his wound, he proceeded to attack and destroy the first machine gun nest with hand grenades and fire from his M1 Thompson submachine gun. After being informed of the severity of his wound by his platoon sergeant, he refused treatment and rallied his men for an attack on the second machine gun position, which he also successfully destroyed before collapsing from blood loss.
As his squad distracted the third machine gunner, Inouye crawled toward the final bunker, eventually drawing within 10 yards. As he raised himself up and cocked his arm to throw his last grenade into the fighting position, a German inside fired a rifle grenade that struck him on the right elbow, severing most of his arm and leaving the primed grenade reflexively "clenched in a fist that suddenly didn't belong to me anymore". Inouye's horrified soldiers moved to his aid, but he shouted for them to keep back out of fear his severed fist would involuntarily relax and drop the grenade. As the German inside the bunker reloaded his rifle, Inouye managed to successfully pry the live grenade from his useless right hand and transfer it to his left. As the German aimed his rifle to finish him off, Inouye managed at last to toss the grenade off-hand into the bunker and destroy it. He stumbled to his feet and continued forward, silencing the last German resistance with a one-handed burst from his Thompson before being wounded in the leg and tumbling unconscious to the bottom of the ridge. When he awoke to see the concerned men of his platoon hovering over him, his only comment before being carried away was to gruffly order them return to their positions, since, as he pointed out, "nobody had called off the war".
The remainder of Inouye's mutilated right arm was later amputated at a field hospital without proper anesthesia, as he had been given too much morphine at an aid station and it was feared any more would lower his blood pressure enough to kill him. Inouye was initially awarded the Distinguished Service Cross for his bravery in this action, with the award later being upgraded to the Medal of Honor by President Bill Clinton (alongside 21 other Nisei servicemen who served in the 442nd Regimental Combat Team and were believed to have been denied proper recognition of their bravery due to their race). His story, along with interviews with him about the war as a whole, were featured prominently in the 2007 Ken Burns documentary The War.
While recovering from war wounds and the amputation of his right forearm from the grenade wound (mentioned above) at Percy Jones Army Hospital, Inouye met future Republican presidential candidate Bob Dole, then a fellow patient. Dole mentioned to Inouye that after the war he planned to go to Congress; Inouye beat him there by a few years. The two have remained lifelong friends. In 2003, the hospital was renamed the Hart-Dole-Inouye Federal Center in honor of the two WWII veterans and another U.S. Senator and fellow WWII veteran who had stayed in the hospital, Philip Hart.
