Violence in the streets of Chicago at the 1968 Democratic Convention further crippled Humphrey's campaign, as Chicago police dealt with anti-war protesters (and in some cases with members of the media) in a very brutal fashion, with pictures of the violence broadcast through homes across America on television. Humphrey was never critical of the violence and for the early part of the campaign he had difficulty attracting the support of the party's left, a segment which in other times would have flocked to him.
Meanwhile, at a much more peaceful convention, the Republican Party nominated Richard Nixon, dubbed by one author as "the man nobody liked, but everyone could live with". Nixon immediately went after southern voters who were rejecting their party following Johnson's civil rights bills. These efforts were hampered somewhat because former Alabama Governor George Wallace was running as a viable third party candidate who gave those voters somewhere to park their votes.
After the Democratic Convention in late August, Humphrey trailed Nixon by double digits in most polls. His chances seemed hopeless. It looked as if the Democratic Party coalition forged by Franklin Delano Roosevelt was falling apart. Blue-collar workers appeared to be drawn to Wallace. African-Americans felt betrayed, as their segment of the population accounted for a disproportionate number of those being drafter and those dying in Vietnam Liberals were also disaffected over the Vietnam War and ashamed of how their party had treated protestors at the convention. The South had been lost following the civil rights legislation. For a time, Humphrey was mocked for campaigning on "the politics of joy." But Humphrey was known as "the Happy Warrior" and he did not give up without a fight.
In order to distance himself from Johnson, Humphrey stopped being identified in ads as "Vice-President Hubert Humphrey," instead being labelled "Democratic candidate Hubert Humphrey." He attacked Wallace as a racist bigot who appealed to the darker impulses of Americans. Wallace had been rising in the polls, and peaked at 21% in September, but his momentum ended after he selected hawkish General Curtis LeMay as his running mate. When LeMay suggested that tactical nuclear weapons could be used in Vietnam, this scared voters away from the Wallace campaign and back to Humphrey. Polls had shown Wallace winning almost one-half of union members in the summer of 1968, but he suffered a sharp decline in his union support as the campaign progressed. As Wallace's support in the North and Midwest began to wane, Humphrey finally began to climb in the polls.
In October of 1968, Humphrey was rising sharply in the polls due to the collapse of the Wallace vote. He made a decision to distance himself publicly from the Johnson administration on the Vietnam War, calling for a bombing halt. Although this upset Johnson, a key turning point for Humphrey's campaign came when Johnson officially announced a bombing halt, and even a possible peace deal, the weekend before the election. Humphrey received an October surprise in the form of what became known as the "Halloween Peace". It gave his campaign a badly needed boost. Senator Eugene McCarthy, a leader in the peace movement, finally endorsed Humphrey in late October after previously refusing to do so, and by election day the polls had Nixon and Humphrey running even.
The ever politically savvy Nixon anticipated the possible announcement of a last-minute deal to end U.S. involvement in the Vietnam war by Johnson, and he knew that this would benefit Humphrey. Johnson's announcement of an enhanced bombing halt and more intensive talks in which the Viet Cong was a setback for Nixon's campaign. After Johnson announced a halt of the bombing of North Vietnam on October 30, 1968, Humphrey surged ahead of Nixon in some polls.
Bryce Harlow was a former Eisenhower White House staff member and a Nixon supporter. He and Henry Kissinger, who was friendly with both campaigns, fed news to the Nixon campaign of Johnson's effort to help Humphrey with the announcement. Nixon asked Anna Chennault, the wife of a former World War 2 general and a prominent leader in the Asian-American Republican community, to be his channel to South Vietnamese leaders. She agreed and reported to Nixon's campaign manager and law partner (and future Attorney General) John Mitchell.
On November 2, Chennault informed the South Vietnamese ambassador Bui Diem, "I have just heard from my boss in Albuquerque who says his boss [Nixon] is going to win. And you tell your boss [South Vietnamese President Thieu] to hold on a while longer." It was later learned that Lyndon Johnson ordered the wire-tapping members of the Nixon campaign. South Vietnamese refusal to participate in the talks made any chance of a peace accord unlikely, taking much of the wind out of the sails of some of the momentum that the Humphrey Campaign received from the news of the talks.
Historians such as Robert Dallek have written that Nixon's efforts had little effect on things because President Thieu was unwilling to attend the talks in any event and there was little chance of an agreement being reached before the election. What was surprising however was Humphrey's decision not to break the news of Nixon's interference in the talks. Dallek has called Humphrey's decision not to make Nixon's actions public was "an uncommon act of political decency". Historian Jules Witcover characterizes it somewhat differently. He argues that Humphrey thought he was going to win the election, so he did not reveal the information to the public. Humphrey later regretted this as a mistake. He wrote in his memoirs: "I wonder if I should have blown the whistle on Anna Chennault and Nixon. I wish I could have been sure. Damn Thieu. Dragging his feet this past weekend hurt us. I wonder if that call did it. If Nixon knew."
This October surprise was not enough for Humphrey to snatch victory from the jaws of defeat. The election took place on November 5, 1968, and as predicted, it was extremely close, and it was not until the following morning that the television news networks were able to call Nixon the winner. Nixon won California, Ohio, and Illinois, all by three percentage points or less. Nixon won the popular vote with a plurality of 512,000 votes, or by a margin of 43.4% to 42.7% (with 13.5% voting for Wallace). In the electoral college Nixon carried 32 states with 301 electoral votes, to Humphrey's 13 states and 191 electoral votes and Wallace's five states and 46 electoral votes.