During World War I, the Germans built a railroad connecting Bajorai, Kretinga, and the Latvian city of Priekule. In 1924 Kretinga regained its municipal rights. During the interwar period, the village of Kretingsodis, on the other side of the Akmena River, was incorporated into the city. Kretinga gained greater importance after another railroad was built in 1932 that connected it to Šiauliai.
During the first Soviet occupation, under the Molotov-Ribbentrop Pact, a reign of terror resulted in local residents being arrested and, in some cases, executed without trial or deported to Siberia. A local lawyer, Vladas Petronaitis, was arrested and ultimately tortured to death by the Soviet intelligence agency.
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