In early 1862 Edward joined his brother Norwood Penrose "Pen" Hallowell, who was already serving in the 20th Massachusetts Volunteer Infantry. He served as a lieutenant. While he was in the 20th, the regiment saw considerable action including the Peninsula Campaign, the Seven Days, Antietam and Fredericksburg.

Lt. Edward Hallowell then accepted an appointment in the 54th Massachusetts, which was to be led by Robert Gould Shaw as colonel and his brother Norwood as Lieutenant Colonel. The regiment was to be made up of white and black abolitionists fighting together for black freedom. Edward recruited African-American soldiers in Philadelphia and was actually the first officer to occupy the barracks set aside for the 54th at Camp Meigs in Reedville. Recruiting for the regiment proved so successful that a second regiment, the 55th, was formed. Norwood Hallowell was designated as the 55th's colonel and Edward was promoted to major and was second-in-command to Shaw.

By the time of the famous assault by the 54th on Fort Wagner Hallowell was promoted to Lieutenant Colonel. In the assault on Fort Wagner he commanded the left wing with half the regiment's companies. Because of the narrow defile through which the 54th had to pass the left wing was deployed directly behind Shaw and the right wing. Hallowell suffered three wounds in the assault and went home to recuperate. Upon returning he commanded the 54th as a full colonel for the rest of the war, except when he was in temporary command of a brigade.

The 54th and Hallowell continued to serve with distinction during the war. He fought at the Battle of Olustee, the Battle of Honey Hill and the Battle of Boykin's Mill. At Boykin's Mill, Hallowell was in command of Major General Potter's 3rd Brigade. Ironically, when the fortifications around Charleston fell along with the city it was the 54th under Hallowell that occupied various former Confederate posts including Fort Sumter and Fort Wagner. Additionally, the 54th guarded Confederate prisoners of war during this time, including some whom they had faced at Fort Wagner.

Hallowell was mustered out of the Union Army volunteer service on August 20, 1865. Hallowell marched with the Massachusetts members of the 54th Massachusetts Volunteer Infantry Regiment at a post-war victory review held in Boston in December 1865. On January 13, 1866, President Andrew Johnson nominated Hallowell for the award of the honorary grade of brevet brigadier general of volunteers to rank from June 27, 1865 for "meritorious services" during the war. The United States Senate confirmed the award on March 12, 1866.

After the war Edward returned to Medford and became a wool commission merchant. His wounds from the war undoubtedly cut his life short and he died in 1871. He is buried with his wife Charlotte at Mount Auburn Cemetery in Cambridge.