A large force of rebels loyal to Augusto César Sandino attacked the garrison of Ocotal, which was held by a small group of US Marines and Nicaraguan National Guards.

On July 15, Captain Hatfield doubled his watch and that same night, Sandino's rebels began entering the town, two or three men at a time.

At 1:15 am on July 16, a lone marine patrolling the town spotted a suspicious man walking through a street so he fired what became the first shot of the engagement.

A little later, Lieutenant Boyden reboarded his plane, made a few more strafing runs and then flew back to Managua where he informed Major Ross E. Rowell of the battle.

Major Rowell responded by forming a squadron of five De Havilland DH-4 biplanes armed with machine guns and four twenty-five pound bombs each.