A war economy or wartime economy is the set of preparations undertaken by a modern state to mobilize its economy for war production. Philippe Le Billon describes a war economy as a "system of producing, mobilizing and allocating resources to sustain the violence." Some measures taken include the increasing of interest rates as well as the introduction of resource allocation programs. Approaches to the reconfiguration of the economy differ from country to country.

Many states increase the degree of planning in their economies during wars. That in many cases extends to rationing and in some cases to conscription for civil defense, such as the Women's Land Army and Bevin Boys in the United Kingdom during World War II. During total war situations, certain buildings and positions are often seen as important targets by combatants. The Union blockade, Union General William Tecumseh Sherman's March to the Sea during the American Civil War, and the strategic bombing of enemy cities and factories during World War II are all examples of total war.

Concerning the side of aggregate demand, the concept of a war economy has been linked to the concept of "military Keynesianism", in which the government's military budget stabilizes business cycles and fluctuations and/or is used to fight recessions. On the supply side, it has been observed^{[by whom?]} that wars sometimes have the effect of accelerating technological progress to such an extent that an economy is greatly strengthened after the war, especially if it has avoided the war-related destruction. That was the case, for example, with the United States during World War I and World War II. Some economists such as Seymour Melman argue, however, that the wasteful nature of much of military spending eventually can hurt technological progress.

War is often used as a last-ditch effort to prevent deteriorating economic conditions or currency crises, particularly by expanding services and employment in the military and by simultaneously depopulating segments of the population to free up resources and restore the economic and social order. A temporary war economy can also be seen as a means to avoid the need for more permanent militarization. During World War II, U.S. President Franklin D. Roosevelt stated that if the Axis powers won, "we would have to convert ourselves permanently into a militaristic power on the basis of war economy."

The United States has a very complex history with wartime economies. Many notable instances came during the 20th century during which the country's main conflicts were World War I, World War II, the Korean War, and the Vietnam War.

In mobilizing for World War I, the United States expanded its governmental powers by creating institutions such as the War Industries Board (WIB) to help with military production. Others, such as the Fuel Administration, introduced daylight saving time in an effort to save coal and oil while the Food Administration encouraged higher grain production and "mobilized a spirit of self-sacrifice rather than mandatory rationing."

Propaganda also played a large part in garnering support for topics ranging from tax initiatives to food conservation. Speaking on Four Minute Men, volunteers who rallied the public through short speeches, investigative journalist George Creel stated that the idea was extremely popular and the program saw thousands of volunteers throughout the states.

In the case of World War II, the U.S. government took similar measures in increasing its control over the economy. The Fall of France and the Dunkirk evacuation across the English Channel before the Battle of Britain provided the sparks that were needed to begin the country's conversion to a wartime economy and the July 1940 passing of the Two-Ocean Navy Act. The 1941 Attack on Pearl Harbor prolonged and expanded those measures.