The British, after their defeat at the Battle of Coronel on 1 November, sent a large force to track down and destroy the German cruiser squadron.

On 26 November, the squadron set sail for Cape Horn, which they reached on 1 December, then anchored at Picton Island, where they stayed for three days distributing coal from a captured British collier, the Drummuir, and hunting.

The same day Spee proposed to raid the Falkland Islands in order to destroy the British wireless transmitter located there before setting course for Germany.

[7] On 30 October, retired Admiral of the Fleet Sir John Fisher was reappointed First Sea Lord to replace Admiral Prince Louis of Battenberg, who had been forced to resign because of public outcry against a perceived German prince running the British navy, though Louis had been British and in the Royal Navy since the age of 14.

As a result, the battlecruisers Invincible and Inflexible were ordered to leave the Grand Fleet and sail to Plymouth for overhaul and preparation for service abroad.

Captain John Luce of Glasgow, who had been at the Battle of Coronel, objected that there was no need to wait so long and persuaded Sturdee to depart a day early.

The squadron was delayed during the journey for 12 hours when a cable towing targets for practice-firing became wrapped around one of Invincible's propellers, but the ships arrived on the morning of 7 December.

Divers set about removing the offending cable from Invincible; Cornwall's boiler fires were extinguished to make repairs, and Bristol had one of her engines dismantled.

[10] An unlikely source of intelligence on the movement of the German ships was from Mrs Muriel Felton, wife of the manager of a sheep station at Fitzroy, and her maids Christina Goss and Marian Macleod.

The maids took turns riding to the top of a nearby hill to record the movements of the ships, which Felton relayed to Port Stanley by telephone.

Made aware of the German ships, Sturdee had ordered the crews to breakfast, knowing that Canopus had bought them time while steam was raised.

Realizing his danger too late, and having lost any chance to attack the British ships while they were at anchor, Spee and his squadron dashed for the open sea.

Spee was ahead by 15 mi (13 nmi; 24 km), with the German ships in line abreast heading southeast, but there was plenty of daylight left for the faster battlecruisers to catch up.

The German armoured cruisers had the advantage of a freshening north-west breeze, which caused the funnel smoke of the British ships to obscure their target practically throughout the action.

Gneisenau's second-in-command Hans Pochhammer indicated that there was a long respite for the Germans during the early stages of the battle, as the British attempted unsuccessfully to force Admiral Spee away from his advantageous position.

SMS Nürnberg was running at full speed but in need of maintenance, while the crew of the pursuing HMS Kent were pushing her boilers and engines to the limit.

[17] Of the known German force of eight ships, two escaped: the auxiliary Seydlitz and the light cruiser Dresden, which remained at large for a further three months before she was cornered by a British squadron (Kent, Glasgow and Orama) off the Juan Fernández Islands on 14 March 1915.

As a consequence of the battle, the East Asia Squadron, Germany's only permanent overseas naval formation, effectively ceased to exist.

However, Germany put several armed merchant vessels into service as commerce raiders until the end of the war (for example, see Felix von Luckner).

After the battle, German naval experts were baffled at why Admiral Spee attacked the base and how the two squadrons could have met so coincidentally in so many thousand miles of open waters.

Kaiser Wilhelm's handwritten note on the official report of the battle reads: "It remains a mystery what made Spee attack the Falkland Islands.

[18] (Similarly, on 14 March 1915, SMS Dresden was intercepted by British ships while taking on coal at sea in a location identified by NID codebreakers.

)[21] The wreck of Scharnhorst was discovered on 4 December 2019, approximately 98 nautical miles (181 km; 113 mi) southeast of Stanley at a depth of 1,610 m (5,280 ft).