The incident began when American Marines heard gunshots coming from the town of La Paz Centro (located halfway between Managua and Chinandega) at nearly 1:00 in the morning and decided to investigate.

Three blocks into La Paz Centro, the Marines' left flank, led by Sergeant Glendell L. Fitzgerald came under fire from a crowd of about seventy-five armed Nicaraguans, forcing the former to take cover "under a protruding wooden sidewalk and behind a pile of railroad ties along the town’s main street.

Buchanan was fatally wounded by fire coming from a local saloon while crossing Main Street.

It is unknown for sure who commanded the Liberals that attacked the Marines at La Paz Centro, but Francisco Sequeira ("General Cabulla") seemed to be a likely suspect.

After the firefight, two squads of Marines, led by Captain William P. Richards decided to visit Cabulla.