In 1949, the FBI uncovered information detailing the actions of a scientist working on the Los Alamos project, active in disseminating classified information to foreign agents. The scientist, code-named "ChARL'Z" was determined to be Fuchs, The FBI informed British Intelligence liaison Kim Philby (himself a member of the notorious Cambridge spy ring). Philby, afraid of exposing his own espionage activities, passed the information along to British authorities, but lacking hard evidence, Britain was unable to arrest Fuchs.

Ignorant of the investigation centered on him, Fuchs approached a Harwell security officer to inquire as to concerns regarding his father's recent appointment at the University of Leipzig in Soviet-controlled East Germany. MI5 sent William Skardon, one of their top interrogators to interview him. Under friendly questioning, Fuchs broke down and confessed on January 27, 1950. In his confession, Fuchs implicated several spies, including Harry Gold. Exposing Gold in turn exposed David Greenglass, which in turn, exposed Julius Rosenberg and his wife Ethel.

Tried for violating the Official Secrets Act, Fuchs tried to explain his actions by claiming a "controlled schizophrenia" which allowed him to value the Marxist philosophy and passing secrets to the Soviets while at the same time holding a loyalty to England. The court was unimpressed and sentenced Fuchs to 14 years in prison.

Sent to the Wormwood Scrubs prison where he served as the prison librarian. Was released in 1959 after serving as a model prisoner. Moved to East Germany and headed the Central Institute for Nuclear Physics in Dresden.

Married Greta Keilson and lived in relative anonymity until his death, by natural causes, in 1988.