In 1774 the First Continental Congress called on the colonies to resist Parliament's recent tax policy by joining in an association to boycott goods imported from Britain.

In July 1775 he and William Alexander, Lord Stirling, led militia forces which captured a British transport off Elizabethtown.

In the spring of 1776 Dayton (as colonel) and his 3rd New Jersey troops (including his young son Jonathan, who would become the regimental paymaster by August) were sent to support an invasion of Canada.

However, they were diverted to New York's Mohawk Valley where Colonel Dayton constructed fortifications to protect the colonists from Loyalist and Indian insurrections.

In 1777, Dayton set up a spy network for George Washington on Staten Island to work in parallel with an established American intelligence agent, John Mersereau.