Palma was left destroyed, and a major oil and gas company decided to suspend all operations in the area due to the battle.

The battle was part of the insurgency in Cabo Delgado, which started in 2017 and has resulted in the deaths of thousands of people, mainly local civilians.

[28][29] In response to the escalating rebellion, the Mozambican government hired several private military companies, most importantly the South African Dyck Advisory Group (DAG).

[20] French energy giant Total SE which maintained a site at the Afungi peninsula near Palma, had hired at least five security companies, namely Arkhe, GardaWorld, Blue Mountain, Control Risks and G4S.

[20] The Total SE site had been described as a project which could completely change the local economy, as it would provide a massive revenue to the Mozambican government.

[15] ACLED analyst Jasmine Opperman argued that an assault on Palma was expected, and that security experts had warned foreign embassies and the Mozambican government that the militants were planning an attack, only to be ignored.

Experts suspect that parts or all of Ansar al-Sunna have joined IS-CAP, but that IS central command exerts almost no control over its Mozambican affiliates.

[33][28] IS has taken responsibility for a relatively small number of attacks in Mozambique, compared to the overall insurgency, but has claimed its involvement in the most significant rebel operations.

[37] Jamestown Foundation analyst Jacob Zenn argued that this hinted at some kind of communications breakdown between the Mozambican rebels and IS central command, possibly due to the death of "key media leaders on either side".

[38] Prior to the battle, several Islamist rebels, disguised as civilians, soldiers, and policemen infiltrated Palma, hiding weaponry and preparing for the assault.

The rebels quickly secured the coast as well as the main roads into the town, including a crucial crossroads, and the airfield where they shot at an incoming plane, forcing it to break off the landing.

[12][44][48] According to DAG director Lionel Dyck, the Paramount Group-affiliated helicopters returned once to Palma on 25 March, but withdrew again after mistakenly firing on Mozambican soldiers.

[21] Meanwhile, the South African mercenaries told those at the Amarula Hotel that they could only try to help them again on the next day,[9] and that they should stay put, as the rebels were possibly lying in wait to ambush anyone fleeing.

[12] Shortly before the breakout was attempted, the hotel owner organized a last airborne evacuation using a helicopter belonging to the Everett Aviation company.

[44][22][47] Meanwhile, the rebels had begun to loot and ravage the town, torching many buildings including the hotels as well as a clinic and destroying about two-thirds of the infrastructure.

[44][22] Later in the day, security sources claimed militants had seized control of the town although fighting was still taking place around Palma.

[54] The rebels actively targeted the fleeing boats with small arms and mortars, forcing some to break off rescue operations.

[55] Several had fled into the nearby forests and mangroves,[54] while others managed to escape north across the border to Tanzania[56] despite the Tanzanian government's initial refusal to allow refugees entry.

[13] However, fighting continued "in pockets [...] across the town" between the rebels, and the army, police and the mercenaries, with reports of beheaded bodies strewn over the streets.

Dyck assessed that it would be difficult for the government to retake the town, and one security expert also argued that Palma was a "game-changer", as the rebels proved to be much better trained, armed, and organized than ever before.

[57] On the same day, DAG director Dyck declared in an interview that "as I sit here, Palma is lost", specifying that a major response by the Mozambican government was necessary to drive the rebels from the town.

[8] FADM army spokesman Chongo Vidigal claimed that Palma remained disputed, but that the military had established some control over the port area.

[47] On the same day, Botswana's President Mokgweetsi Masisi, South Africa's Cyril Ramaphosa and Zimbabwe's Emmerson Mnangagwa held a meeting to discuss ways to help Mozambique fight the insurgent groups.

[18] The World Food Programme (WFP) temporarily suspended evacuation flights from Palma due to the deteriorating security situation in the city.

[60] Sporadic clashes continued on 3 April, as rebels repeatedly launched short raids against FADM troops in Palma before retreating again.

The government forces finally secured the local airfield,[18] with FADM commander Vidigal later stating that his troops had encountered most resistance there.

[6] On 4 April, FADM claimed that it had fully recaptured Palma, allegedly killing a significant number of militants,[6] while DAG aircraft left the area.

[4] The battle threatened plans by the Mozambican government to extract Cabo Delgado's significant liquid natural gas (LNG) reserves.

[8] A South African man, Adrian Nel[69][70] who was driving one of the convoys' vehicles[71] and a British contractor are confirmed killed during the attacks.

[8] By May 2021, gunfights and fires were reported in regular intervals in Palma, as rebels continued to raid the town, again forcing local civilians to flee.