On March 15, 1955, he was nominated as ambassador to Korea, to succeed Ellis O. Briggs; previously, he had served as deputy chief of mission in Manila for several years. Sworn in on March 28, he arrived in Seoul on May 8. By the end of the week, he had presented his credentials to Syngman Rhee. His tenure as ambassador was strained, as tensions were high: riots and unrest occurred against the Neutral Nations Supervisory Commission, as South Koreans considered the commission to be tainted by Communist influence, and demonstrations rocked the United States Embassy and his residence; the Eighth Army began tightening restrictions on the black market, which Korean men saw as unfairly targeting them; and foreign businessmen, including Americans, charged that they were being unfairly taxed by the South Korean government; all of which contributed to an inability to work with Rhee. Thus besieged on all sides, Lacy soon began his early departure as ambassador to Korea: on October 15, President Eisenhower accepted his resignation due to "ill health", a contrived excuse. He was succeeded by Walter C. Dowling in mid-1956.
Later career
After his time as ambassador, Lacy worked as a special assistant to Secretary of StateJohn Foster Dulles. In 1958, while serving as the President's Special Assistant to East-West Exchanges, he negotiated with the Soviet diplomat, G.N. Zaroubin, to begin a series of cultural and scientific exchanges between the two nations: these would lead to, in the words of Glenn T. Seaborg, "cooperation in peaceful nuclear applications" and "exchanges in the peaceful uses of nuclear energy". It was also considered to be a "major cultural agreement" for which Lacy received much credit. By establishing a means of meeting and exhibition, exchanges also lead to the Kitchen Debate between Nikita Khrushchev, then the Premier of the Soviet Union, and Richard Nixon, in 1959.. Before he retired in 1961, he served as deputy commandant of the National War College.
Personal life
In 1943, he married a British widow, Margaret Innes Franks, whose husband had died at the Battle of Dunkirk. With her, he had a son before their divorce; he later married Kirsten Magelssen, with whom he had a daughter; before marrying a third time, to Elizabeth. William Sterling Byrd Lacy died on December 11, 1978, at the age of 68, survived by his third wife and children.