Al-Moussawi returned to Lebanon in 1978. Along with Subhi al-Tufayli he spearheaded the formation of Hezbollah movement in the Beqaa Valley in 1982, one of the three major areas of Shia population in Lebanon. From 1983 to 1985 he is reported to have served as operational head of the Hezbollah Special Security Apparatus. From late 1985 until April 1988 he was head of Hezbollah's military wing, the Islamic Resistance. According to some reports, al Musawi was responsible for the abduction of Lt. Col William Higgins while commander of Hezbollah's Islamic Resistance. In 1991, Hezbollah had entered a new era with the end of both the Iran–Iraq War and Lebanese Civil War, the Taif Agreement and the release of the Kuwait 17 bombers. A new leader was thought to be needed to facilitate the release of the Western hostages held by Hezbollah and more importantly to shift Hezbollah's focus to resistance activity against Israel. Al-Moussawi also promised to "intensify military, political and popular action in order to undermine the peace-talks." He did not support entering mainstream politics. Unlike other Hezbollah figures, he advocated the acceptance of Taif Agreement, which was the rejection of theocratic state in Lebanon.
Assassination
On 16 February 1992, Israeli Apache helicopters fired missiles at the motorcade of al-Moussawi in southern Lebanon, killing al-Moussawi, his wife, his five-year-old son, and four others. Israel said the attack had been planned as an assassination attempt in retaliation for the kidnapping and death of missing Israeli servicemen in 1986 and the abduction of US Marine and UN peace-keeping officer William R. Higgins in 1988. In retaliation, the Islamic Jihad Organization carried out the Israeli Embassy attack in Buenos Aires. After the attack, the Islamic Jihad Organization declared that it was carried out as revenge for the martyr infant Hussein, al Musawi's five-year-old son, who had been killed with his father. Later it was revealed by Dieter Bednarz and Ronen Bergman that the original plan of Israel had been just to abduct al Musawi to realize the release of Israeli prisoners. However, Ehud Barak, then Israeli chief of staff, convinced then Israeli Prime Minister Shamir to order his assassination. Al Musawi was succeeded as Secretary General of Hezbollah by Sayyed Hassan Nasrallah.