The Union victory in January in the Second Battle of Fort Fisher meant that Wilmington, 30 miles upriver, could no longer be used by the Confederacy as a port.

The Confederate General Braxton Bragg burned stores of tobacco and cotton, among other supplies and equipment, before leaving the city, to prevent the Union from seizing them.

Bragg remained in Wilmington in order to remove a stockpile of government stores and also to prevent the Union forces on the coast from reinforcing Major General William T. Sherman's army.

A Confederate division under Major General Robert Hoke occupied the Sugar Loaf Line north of Fort Fisher.

On February 11 Schofield attacked Hoke's Sugar Loaf Line with Alfred Terry's corps; the engagement started in the morning with a bombardment by Union gunboats along the Atlantic side of the fortifications.

Next, Major General Jacob D. Cox's 3rd Division, XXIII Corps was ferried to the west bank of the Cape Fear River to deal with Fort Anderson, the main fortress guarding Wilmington.

[6] Rear Admiral David D. Porter's gunboats sailed up the river and shelled Fort Anderson silencing all twelve guns.

Commander William B. Cushing the Federal Navy constructed a Quaker (or fake) monitor to trick the Rebels into detonating their water mines to make way for Porter's gunboats.

The fort's commander, General Johnson Hagood sensed the trap and received permission from Gen. Hoke to pull back to a defensive line along Town Creek to the north.

Cox was eager to attempt his encircling plan that, due to Hagood's retreat at Fort Anderson, the Federals had been unable to complete.

The Federals then waded through the swamp and attacked the Confederate flank, routing the two regiments, and taking 375 prisoners along with two pieces of artillery.