In 1798, during his Napoleon's Expedition to Egypt, Napoleon captured Malta. Napoleon demanded from Grand Master Ferdinand von Hompesch zu Bolheim that his ships be allowed to enter the port and to take on water and supplies. The Grand Master replied that only two foreign ships could be allowed to enter the port at a time. Bonaparte, aware that such a procedure would take a very long time and would leave his forces vulnerable to Admiral Nelson, immediately ordered a cannon fusillade against Malta. The French soldiers disembarked in Malta at seven points on the morning of 11 June and attacked. After several hours of fierce fighting, the Maltese in the west were forced to surrender.

Napoleon opened negotiations with the fortress capital of Valletta. Faced with vastly superior French forces and the loss of western Malta, the Grand Master negotiated a surrender to the invasion. Hompesch left Malta for Trieste on 18 June. He resigned as Grand Master on 6 July 1799.

The knights were dispersed, though the order continued to exist in a diminished form and negotiated with European governments for a return to power. The Russian Emperor, Paul I, gave the largest number of knights shelter in Saint Petersburg, an action which gave rise to the Russian tradition of the Knights Hospitaller and the Order's recognition among the Russian Imperial Orders. The refugee knights in Saint Petersburg proceeded to elect Tsar Paul as their Grand Master – a rival to Grand Master von Hompesch until the latter's abdication left Paul as the sole Grand Master. Grand Master Paul I created, in addition to the Roman Catholic Grand Priory, a "Russian Grand Priory" of no fewer than 118 Commanderies, dwarfing the rest of the Order and open to all Christians. Paul's election as Grand Master was never ratified under Roman Catholic canon law, and he was the de facto rather than de jure Grand Master of the Order.