Spain began its campaign by seizing the Chincha Islands, which were rich in guano, and demanding indemnity as recompense for the murder of two Spanish citizens in Lambayeque.

[10][page needed] Vacillating, President Pezet began removing vast quantities of Peru's guano deposits to give to Spain when Spanish ships threatened Callao and the neighboring coastline.

[citation needed] In November 1865, in a moment of nationalism, Colonel Mariano Ignacio Prado seized power from Pezet after a coup, and organized an effective defense against Spanish aggression that culminated with the Battle of Callao.

[citation needed] The Spaniards arrived at Callao, on April 25, with seven warships and seven auxiliary ships carrying 252 guns, most of them (126 pieces) 68-pounder cannons.

[12] The Spanish ships included the ironclad Numancia and the steam frigates Reina Blanca, Resolución, Berenguela, Villa de Madrid, Almansa and the armored corvette Vencedora.

The strong forts and batteries of the stronghold at Callao, which had once repelled Sir Francis Drake and John Hawkins, were reinforced with five heavy British-made 22-ton Blakely rifles.

The Spanish frigate Villa de Madrid, meantime, was hit by a Blakely 450-pound projectile, which inflicted 35 casualties and destroyed her boilers.

A Spanish shot from the Blanca hit the armored turret La Merced, destroying it and killing or injuring 93 men, including Peruvian Minister of War and Navy José Gálvez Egúsquiza and colonels Cornelio Borda and Enrique Montes.

[22] The Peruvian sustained then heavy casualties, as many of the 3,000 infantry and cavalry troops present during the battle had been entrenched outside the forts to prevent an alleged Spanish attempt of landing, suffering the gunfire of the Numancia, the Almansa, the Resolución and the Vencedora.

The badly battered Spanish ships remained for several days on San Lorenzo island, taking care of their wounded and their repairs.

According to Admiral Méndez Nuñez, almost all of the coastal batteries were silenced during the engagement and only three guns of Santa Rosa's fort were still making fire when the Spanish fleet left the battlefield.

[27] Shortly after, the French newspaper La Presse published a new portraying the bombardment as a Spanish victory: The news from Callao, May 9, give the following details about the bombing of this place.

In honor to them, on 20 July 1866, before the Battle of Lissa, the Austrian Admiral Wilhelm von Tegetthoff harangued his crews shouting "Let's imitate the Spanish at Callao!

"[This quote needs a citation]In 1870, former U.S. general Alvin Peterson Hovey, member of the United States legation to Perú, described the battle as inconclusive but glorious for both countries in a letter to the U.S. Secretary of State Hamilton Fish: But the battle came on, on the glorious "Dos de Mayo," for so both Spain and Peru call it, and the fleet bore bravely up toward the forts, reaching within three-quarters of a mile.

While the war still remained without a peace settlement, the Peruvians contemplated the idea of invading the Philippines to ward off the Spanish ships that were in the area.

The Peruvian Government hired Commodore John Randolph Tucker, who had outshone himself in the American Civil War fighting for the Confederate States of America.