He was held as a prisoner of war in the Hoa Lo prison for the next seven years. Locked in leg irons in a bath stall, he was routinely tortured and beaten. When told by his captors that he was to be paraded in public, Stockdale slit his scalp with a razor to purposely disfigure himself so that his captors could not use him as propaganda. When they covered his head with a hat, Stockdale beat himself with a stool until his face was swollen beyond recognition. He told them in no uncertain terms that they would never use him. When Stockdale heard that other prisoners were dying under the torture, he slit his wrists and told them that he preferred death to submission.

Little did Stockdale know that the actions of his wife, Mrs. Sybil Stockdale, had a tremendous impact on the North Vietnamese. Early in her husband's captivity she organized The League of American Families of POWs and MIAs, with other wives of servicemen who were in similar circumstance. By 1968 she and her organization, which called for the President and the U.S. Congress to publicly acknowledge the mistreatment of the POWs (something that they had never done even though they had evidence of gross mistreatment), was finally getting the attention of the American press and consequently the attention of the North Vietnamese. Mrs. Stockdale personally made these demands known at the Paris Peace Talks and private comments made to her by the head of the Vietnamese delegation there indicated concern that her organization might catch the attention of the American public, something the North Vietnamese knew could turn the tide against them. The result could not have been more fortunate for James Stockdale at the very time he slit his wrists.

Together with other captives such as George Thomas Coker, Stockdale was part of a group of about a dozen prisoners known as the "Alcatraz Gang", separated from other captives and placed in solitary confinement for their leadership in resisting their captors.[2]

In a business book by James C. Collins called Good to Great, Collins writes about a conversation he had with Stockdale regarding his coping strategy during his period in the Vietnamese POW camp.[3]

"I never lost faith in the end of the story, I never doubted not only that I would get out, but also that I would prevail in the end and turn the experience into the defining event of my life, which, in retrospect, I would not trade."[4]

When Collins asked who didn't make it out, Stockdale replied:

"Oh, that’s easy, the optimists. Oh, they were the ones who said, 'We're going to be out by Christmas.' And Christmas would come, and Christmas would go. Then they'd say, 'We're going to be out by Easter.' And Easter would come, and Easter would go. And then Thanksgiving, and then it would be Christmas again. And they died of a broken heart."[5]

Stockdale then added:

"This is a very important lesson. You must never confuse faith that you will prevail in the end—which you can never afford to lose—with the discipline to confront the most brutal facts of your current reality, whatever they might be.”[6]

Witnessing this philosophy of duality, Collins went on to describe it as the Stockdale Paradox.