Fort Niagara, a strategically important American outpost near the Niagara River's outlet into Lake Ontario, had been weakened by the withdrawal of most regular American soldiers to participate in an attack on Montreal. This left Brigadier General George McClure with a small and undermanned garrison at the fort. The situation worsened when McClure ordered the burning of the nearby village of Niagara, creating a pretext for British retaliation.

British Lieutenant General Gordon Drummond seized the opportunity to retake Fort Niagara and ordered a surprise night assault in December 1813. A force of British regulars and militia, led by Colonel John Murray, crossed the Niagara River above the fort. They captured American pickets and advanced silently towards the fort. Resistance from the American defenders, which included a stand at the South Redoubt, was fierce. Ultimately, the British forces breached the defenses and, in a brutal turn, bayoneted many of the defenders. The British reported minimal casualties, with six killed and five wounded, while American casualties were significant, with at least 65 killed and many more wounded or taken prisoner.

Following the capture of Fort Niagara, British forces under Major General Phineas Riall advanced further into American territory, burning villages and engaging American forces at the Battle of Lewiston and the Battle of Buffalo. Fort Niagara remained in British possession until the end of the war. The capture of Fort Niagara and the subsequent reprisals marked a turning point in the War of 1812 and had lasting consequences for the Niagara region. Fort Niagara remained in British possession until the end of the war.