During the First World War Knobelsdorff served primarily with his original regiment and later in staff and command roles across various divisions and corps earning both classes of the Iron Cross by early 1915 along with several other German and Austrian decorations including the Ritterkreuz II. Klasse zum Hausorden vom Weißen Falken mit Schwertern the Österreichisches Militärverdienstkreuz III. Klasse mit Kriegsdekoration und Schwertern and the Lippesches Kriegsverdienstkreuz. He was wounded in action and spent time in hospital yet continued to demonstrate leadership as a battalion commander and general staff officer participating in operations on the Western and Eastern Fronts. After the armistice he was retained in the Reichswehr advancing through the interwar years with assignments that included regimental adjutant duties staff positions in divisions and artillery commands and command of Infantry Regiment 102 eventually reaching the rank of Generalmajor by January 1939.
At the beginning of the Second World War Knobelsdorff served as chief of staff of Grenzschutz-Abschnittskommando 3 before assuming command of the 19th Infantry Division in February 1940 which he led through the Battle of France. The division was later converted into the 19th Panzer Division under his oversight and he was promoted to Generalleutnant in December 1940. Deployed to the Eastern Front with Operation Barbarossa in 1941 the division under his command advanced rapidly through Soviet territory engaging in intense fighting that culminated in the capture of the key road and rail hub of Velikiye Luki on 17 July. House-to-house combat raged as German tanks and grenadiers cleared the streets amid repeated Soviet counterattacks that threatened the division's supply lines yet Knobelsdorff personally directed swift reinforcements that repelled the flanks and secured the town by mid-afternoon severing vital Soviet communications between Kiev and Leningrad and closing the Velikiye Luki pocket. For this achievement he received the Knight's Cross of the Iron Cross on 17 September 1941.
Following a period of illness that forced a temporary break from command in early 1942 Knobelsdorff returned to lead successive corps formations including the X Army Corps the II Army Corps and then the XXIV Panzer Corps before taking permanent command of the XXXXVIII Panzer Corps in late 1942. Promoted to General der Panzertruppe in August 1942 he directed the corps during Manstein's counteroffensive in early 1943 smashing Soviet forces near Kharkov in late February and linking with other units to create a stable front around Belgorod by mid-March. In the Kursk offensive of July 1943 his corps spearheaded the assault through the first Soviet defensive belts under heavy rain and artillery fire routing massed enemy tank formations in furious meeting engagements that destroyed dozens of Soviet vehicles while repulsing waves of counterattacks from Guards tank and mechanized corps. Although the broader operation was halted the corps' repeated breakthroughs and defensive stands around Belgorod and Kharkov inflicted devastating losses earning Knobelsdorff the Oak Leaves to his Knight's Cross on 12 November 1943.
In early 1944 Knobelsdorff assumed command of the XXXX Panzer Corps in the Nikopol Bridgehead where encirclement threatened his forces. On 15 February he orchestrated a skillful breakout under intense Soviet pressure extricating his divisions largely intact before conducting a masterful fighting retreat across the Dnieper Bug and Dniestr rivers all the way to the Romanian border by late May. When Soviet breakthroughs struck in March he ordered precise counterattacks to seal gaps insisting on integrated panzer-infantry operations and using armor as a mobile shield to cover phased night withdrawals to successive defensive lines. Despite overwhelming enemy superiority in numbers his corps traded ground methodically preserved combat cohesion and prevented a rout through constant crises demonstrating calm decisiveness and frontline leadership that turned potential disaster into an orderly withdrawal. For these actions he was awarded the Swords to his Knight's Cross on 21 September 1944 becoming the 100th recipient of the Knight's Cross with Oak Leaves and Swords.
Later in 1944 Knobelsdorff briefly commanded the 1st Army on the Western Front but was relieved in November after resisting orders to transfer armored assets for the Ardennes offensive. He spent the final months of the war in the Führer Reserve was captured by American forces in April 1945 and released in December 1947. In the postwar years he lived quietly in Hannover authoring the detailed regimental and divisional history Geschichte der niedersächsischen 19. Panzer-Division 1939-1945 which was published in 1958 preserving the record of his former unit. Heinrich Otto Ernst von Knobelsdorff died on 21 October 1966 in Hannover at the age of eighty and was buried in the Engesohde City Cemetery.
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