The Albany movement was shown to be an important education for the SCLC, however, when it undertook the Birmingham campaign in 1963. Executive Director Wyatt Tee Walker carefully planned the early strategy and tactics for the Birmingham campaign. It focused on one goal—the desegregation of Birmingham's downtown merchants, rather than total desegregation, as in Albany. The campaign used a variety of nonviolent methods of confrontation, including sit-ins, kneel-ins at local churches, and a march to the county building to mark the beginning of a drive to register voters. The city, however, obtained an injunction barring all such protests. Convinced that the order was unconstitutional, the campaign defied it and prepared for mass arrests of its supporters. King elected to be among those arrested on April 12, 1963.

While in jail, King wrote his famous "Letter from Birmingham Jail" on the margins of a newspaper, since he had not been allowed any writing paper while held in solitary confinement. Supporters appealed to the Kennedy administration, which intervened to obtain King's release. Walter Reuther, president of the United Auto Workers, arranged for $160,000 to bail out King and his fellow protestors. King was allowed to call his wife, who was recuperating at home after the birth of their fourth child and was released early on April 19.

The campaign, however, faltered as it ran out of demonstrators willing to risk arrest. James Bevel, SCLC's Director of Direct Action and Director of Nonviolent Education, then came up with a bold and controversial alternative: to train high school students to take part in the demonstrations. As a result, in what would be called the Children's Crusade, more than one thousand students skipped school on May 2 to meet at the 16th Street Baptist Church to join the demonstrations. More than six hundred marched out of the church fifty at a time in an attempt to walk to City Hall to speak to Birmingham's mayor about segregation. They were arrested and put into jail. In this first encounter, the police acted with restraint. On the next day, however, another one thousand students gathered at the church. When Bevel started them marching fifty at a time, Bull Connor finally unleashed police dogs on them and then turned the city's fire hoses water streams on the children. National television networks broadcast the scenes of the dogs attacking demonstrators and the water from the fire hoses knocking down the schoolchildren.

Widespread public outrage led the Kennedy administration to intervene more forcefully in negotiations between the white business community and the SCLC. On May 10, the parties announced an agreement to desegregate the lunch counters and other public accommodations downtown, to create a committee to eliminate discriminatory hiring practices, to arrange for the release of jailed protesters, and to establish regular means of communication between black and white leaders.