In early January 1942, the Dinara Division was formed after Đujić was contacted by Mihailović, via a courier.
Under Mihailović's putative control, Ilija Trifunović-Birčanin played a central role in organising the units of Chetnik leaders in western Bosnia, Lika, and northern Dalmatia into the Dinara Division and dispatched former Royal Yugoslav Army officers to help.
Đujić was designated the commander of the division with a goal of the "establishment of a Serb national state" in which "an exclusively Orthodox population is to live".
At the time of its formation, the division was no more than 1,500 strong.
The headquarters of the Dinara Division was located in Knin.

In mid-April, Đujić fomented a pro-Chetnik coup in a Partisan unit in the Gračac district northwest of Knin, which was part of a pattern of subversive Chetnik activity in the Knin region at the time.
Around the same time Đujić's Chetniks were launching raids against villages held by the Partisans between Bosansko Grahovo and Drvar in conjunction with the Italians, who considered him a filibuster.
He operated in northern Dalmatia under Trifunović-Birčanin who acted as liaison officer between the Chetniks and Italians, and whose collaboration agreements were condoned by Mihailović.
By summer 1942, Đujić's Chetniks were effectively Italian auxiliaries, and the Italians began providing Chetnik detachments with arms, ammunition and supplies.
It is likely that the agreements between Đujić and the Italians were negotiated without Mihailović's prior knowledge.
They were later denounced by Mihailović.

In mid-May, Đujić was a member of a Chetnik delegation that approached the Ustaše civil administration in the Knin region, and discussed joint action against the increasing threat from the Partisans.
They were given 100,000 kuna and arrangements were made for the Chetniks to co-locate units with NDH forces and to receive food from the Ustaše authorities.
On 28 June, as a gathering in the village of Kosovo near Knin, Đujić urged his Chetniks to be loyal to the NDH.
In this way, Đujić and other Chetnik leaders established co-operation with the Ustaše, although these relationships were "based only on their common fear of the Partisans" and "characterised by distrust and uncertainty".
Đujić actively co-operated with Italian forces, with whom he had concluded a non-aggression pact.
In late September, Đujić's Chetniks killed up to 200 Croats in the village of Gata near Split, outraging the Italians.
In October, Đujić told his men "we Chetniks have to be in good relations with the Croats for the time being in order to get a large number of arms and munitions, but when the time comes we will settle accounts with them".
In the same month, while Đujić and fellow Chetnik leader Uroš Drenović were hoping to join forces in western Bosnia, the Partisans were in the ascendancy.
In November, arrangements were made with the Italians for 3,000 Herzegovinian Chetniks to be transferred to the Knin region and Lika to prevent the destruction of the Dinara Division by the Partisans.
This transfer was effected in mid-December.
   
In early February 1943, Đujić and fellow Chetnik leader Petar Baćović tried to participate in the Axis Case White offensive against the Partisans but the Germans stopped them from getting involved.
On 10 February, Đujić, Ilija Mihić, Petar Baćović and Radovan Ivanišević, the Chetnik commanders of east Bosnia, Herzegovina, Dalmatia, and Lika, signed a joint proclamation declaring to the "people of Bosnia, Lika, and Dalmatia" that "since we have cleansed Serbia, Montenegro, and Herzegovina, we have come to help to crush the pitiful remnants of the Communist international, criminal band of Tito, Moša Pijade, Levi Vajnert and other paid Jews".
The Partisan rank and file was called upon to "kill the political commissars and join our ranks right away," like the "hundreds and hundreds who are surrendering every day, conscious that they have been betrayed and swindled by the Communist Jews."
By 17 February, it was clear that the Chetniks in western Bosnia, including Đujić's D
In early January 1942, the Dinara Division was formed after Đujić was contacted by Mihailović, via a courier. Under Mihailović's putative control, Ilija Trifunović-Birčanin played a central role in organising the units of Chetnik leaders in western Bosnia, Lika, and northern Dalmatia into the Dinara Division and dispatched former Royal Yugoslav Army officers to help. Đujić was designated the commander of the division with a goal of the "establishment of a Serb national state" in which "an exclusively Orthodox population is to live". At the time of its formation, the division was no more than 1,500 strong. The headquarters of the Dinara Division was located in Knin. 
In mid-April, Đujić fomented a pro-Chetnik coup in a Partisan unit in the Gračac district northwest of Knin, which was part of a pattern of subversive Chetnik activity in the Knin region at the time. Around the same time Đujić's Chetniks were launching raids against villages held by the Partisans between Bosansko Grahovo and Drvar in conjunction with the Italians, who considered him a filibuster. He operated in northern Dalmatia under Trifunović-Birčanin who acted as liaison officer between the Chetniks and Italians, and whose collaboration agreements were condoned by Mihailović. By summer 1942, Đujić's Chetniks were effectively Italian auxiliaries, and the Italians began providing Chetnik detachments with arms, ammunition and supplies. It is likely that the agreements between Đujić and the Italians were negotiated without Mihailović's prior knowledge. They were later denounced by Mihailović.
In mid-May, Đujić was a member of a Chetnik delegation that approached the Ustaše civil administration in the Knin region, and discussed joint action against the increasing threat from the Partisans. They were given 100,000 kuna and arrangements were made for the Chetniks to co-locate units with NDH forces and to receive food from the Ustaše authorities. On 28 June, as a gathering in the village of Kosovo near Knin, Đujić urged his Chetniks to be loyal to the NDH. In this way, Đujić and other Chetnik leaders established co-operation with the Ustaše, although these relationships were "based only on their common fear of the Partisans" and "characterised by distrust and uncertainty". Đujić actively co-operated with Italian forces, with whom he had concluded a non-aggression pact. In late September, Đujić's Chetniks killed up to 200 Croats in the village of Gata near Split, outraging the Italians. In October, Đujić told his men "we Chetniks have to be in good relations with the Croats for the time being in order to get a large number of arms and munitions, but when the time comes we will settle accounts with them". In the same month, while Đujić and fellow Chetnik leader Uroš Drenović were hoping to join forces in western Bosnia, the Partisans were in the ascendancy. In November, arrangements were made with the Italians for 3,000 Herzegovinian Chetniks to be transferred to the Knin region and Lika to prevent the destruction of the Dinara Division by the Partisans. This transfer was effected in mid-December.    
In early February 1943, Đujić and fellow Chetnik leader Petar Baćović tried to participate in the Axis Case White offensive against the Partisans but the Germans stopped them from getting involved. On 10 February, Đujić, Ilija Mihić, Petar Baćović and Radovan Ivanišević, the Chetnik commanders of east Bosnia, Herzegovina, Dalmatia, and Lika, signed a joint proclamation declaring to the "people of Bosnia, Lika, and Dalmatia" that "since we have cleansed Serbia, Montenegro, and Herzegovina, we have come to help to crush the pitiful remnants of the Communist international, criminal band of Tito, Moša Pijade, Levi Vajnert and other paid Jews". The Partisan rank and file was called upon to "kill the political commissars and join our ranks right away," like the "hundreds and hundreds who are surrendering every day, conscious that they have been betrayed and swindled by the Communist Jews." By 17 February, it was clear that the Chetniks in western Bosnia, including Đujić's D
Momčilo Đujić