In 1943, Murmelstein was himself interned in the camp of Theresienstadt, or Terezin, in a former Czechoslovakian fortress. This camp was for many a scam and a lie. Eichmann promised to those Jews who paid him for the privilege the luxuries of a spa in what was billed as a "model ghetto," but while those who paid were "sent off in second-class train compartments well stocked with food and medicine," they found at their destination that they were to "be attacked by guards and dogs." Just as Murmelstein had been a leader of the Viennese Jewish community, he was to become a leader in Theresienstadt as well. The Judenrat of Theresienstadt was, at the time of Murmelstein's arrival, led by Jakob Edelstein. Murmelstein was quickly appointed to this body. He soon became its third-ranking member. After the deportation of Edelstein to Auschwitz in 1944 and the execution of Edelstein's successor, Paul Eppstein, for an alleged escape attempt, Murmelstein took the position of Elder himself in September 1944 and kept it until the camp's liberation by the Russians on 5 May 1945. During his time in the camp, Murmelstein was actively involved in polishing its image through superficial renovation and beautification that was exploited in propaganda films in 1942 and 1944. These films reputedly contributed to hiding the true nature of the camp from the Red Cross during their 1944 inspection, leading them to declare that the camp was as it appeared to be. Nor was that the only behavior on Murmelstein's part that caused fellow prisoners to fear and revile him, leading him to be nicknamed "Murmelschwein" (conflating his name with the word for "pig"). Murmelstein developed a reputation for ruthless implementation of Nazi policy, for instance driving his fellow prisoners to work in spite of their starvation for 70 hours a week to meet Nazi quotas. This he later described as necessary to avoid the Jewish prisoners being simply exterminated. He also purportedly refused to grant exemptions for deportations to Auschwitz unless a substitution was offered, and he was alleged to accept bribes to keep people from being added to those doomed to that fate. Whatever his actions and his motivations, for Murmelstein the liberation of Theresienstadt did not immediately lead to lasting freedom, as he was quickly detained by the Czechoslovak government on suspicion of collaboration. However, the Czechoslovak government was unable to build a case, and at the end of 1946 Murmelstein was released to emigrate with his family to Rome.