In February 1940, Pawsey returned to Australia to work at the recently formed Division of Radiophysics in CSIR. One group he led developed a microwave set for the Royal Australian Navy while another group under his direction investigated the 'super-refraction' of radio waves in the Earth's atmosphere. Pawsey continued as a research physicist at the Division of Radiophysics until 1962, becoming assistant chief of division in 1952. At the end of World War II he became a pioneer of the new science of radio astronomy, his interest being stirred by the discovery of radio waves from the Galaxy and by reports of intense interference in metre-wave radar receivers caused by disturbances on the Sun. To investigate the latter Pawsey, with Ruby Payne-Scott and Lindsay McCready, used an existing Royal Australian Air Force antenna at Collaroy Plateau, a northern Sydney suburb. In addition to confirming that the Sun was a source of radio noise their data also showed that the temperature in some regions of the Sun were as high as one million degrees. This temperature was far higher than was thought possible at the time. Work by the physicist David Forbes Martyn showed that temperatures peak in the Sun's corona at one million degrees. The observations with the Collaroy antenna not only marked the beginning of radio astronomy in Australia, but also the first time radio astronomy had provided important information on a problem in traditional optical astronomy. The introduction of interferometry was probably Pawsey's most important contribution to radio astronomy. In early 1946 he turned his attention to sunspots as a source of strong fluctuating radio noise. To overcome the limitations of the available antennas, Pawsey used sea interferometry and began observations at Dover Heights which provided a better vantage point than Collaroy. The observations confirmed beyond doubt that sunspots were the source of the strong increase in radio noise. This work was confirmed four months later by radio astronomers at Cambridge University led by Martin Ryle. Members of Pawsey's group invented techniques that were subsequently incorporated into general use in radio astronomy and made important discoveries about the discrete sources of radio emission in the Milky Way and external galaxies. Pawsey did some work on his own, but his main focus was on guiding and administering his research teams, which worked in comparative isolation and sometimes in competition with each other. He was straightforward, honest and humble, and scrupulous in acknowledging his colleagues' achievements. His subordinate Paul Wild, who in 1971 became division chief, said:
Joe Pawsey was the... father of radio astronomy in Australia.... His influence on the growth of radio astronomy in Australia was great because … he just provided ideal conditions, an ideal environment to allow everyone to use their own initiative.... was a wonderfully inspiring leader, very self-effacing and taking no credit for himself, and he was a delight to work under.... was often very perceptive, very good".
International authorities gave much credit to his leadership. In 1963, in his introduction to the Utrecht Symposium on the Solar Spectrum, Professor M.G.J. Minnaert remarked:
The history of solar radio-spectroscopy is mainly the history of Australian work on this subject. At each meeting of the IAU, at each important symposium on radio-astronomy, highly competent specialists such as Wild, Smerd and Christianson, headed by the dynamic personality of... Pawsey, were able to announce spectacular progress.
