The IRA's South Armagh Brigade ambushed a British Army convoy with two large roadside bombs at Narrow Water Castle outside Warrenpoint, Northern Ireland.

[14] On the afternoon of 27 August, a British Army convoy of one Land Rover and two four-tonne lorries—carrying soldiers of the 2nd Battalion, Parachute Regiment—was driving from Ballykinler Barracks to Newry.

[14] At 16:40, as the convoy was driving past Narrow Water Castle, an 800-pound (360 kg) fertiliser bomb, hidden among strawbales on a parked flatbed trailer, was detonated by remote control by IRA members watching from across the border in County Louth.

[20] Shortly afterwards, the two IRA members arrested by the Garda Síochána (the Republic of Ireland's police force) and suspected of being behind the ambush, were found to have traces of gunsmoke residue on their hands and on the motorbike they were riding.

[21] The IRA's first statement on the incident, however, denied that any shots had been fired at the troops,[22] and according to Royal Ulster Constabulary (RUC) researchers, the soldiers might have mistaken the sound of ammunition cooking off for enemy gunfire.

[16] A rapid reaction unit was sent by Gazelle helicopter, consisting of Lieutenant-Colonel David Blair, commanding officer of the Queen's Own Highlanders, his signaller Lance Corporal Victor MacLeod, and army medics.

[26] The IRA had been studying how the British Army behaved after a bombing and correctly predicted that they would set up an incident command point at the stone gateway on the other side of the road.

At 17:12, thirty-two minutes after the first explosion, another 800-pound (360 kg) bomb hidden in milk pails exploded at the gateway, destroying it and hurling lumps of granite through the air.

He was asked to identify the face of his friend, Major Peter Fursman, still recognisable after it had been ripped from his head by the explosion and recovered from the water by divers from the Royal Engineers.

"[29] The Warrenpoint ambush was the deadliest attack on the British Army during the Troubles and the Parachute Regiment's biggest loss since World War II, with sixteen paratroopers killed.

[15][30] The ambush happened on the same day that Lord Mountbatten, a prominent relative and close confidant of the British royal family, was assassinated by an IRA bomb aboard his boat at Mullaghmore, along with three others.

[31] The day after the Mountbatten and Warrenpoint attacks, the Ulster Volunteer Force retaliated by shooting dead John Patrick Hardy (43), a Catholic civilian, at his home in Belfast's New Lodge estate.

Lieutenant-General Sir Timothy Creasey, General Officer Commanding Northern Ireland, suggested to Margaret Thatcher that internment should be brought back and that liaison with the Gardaí should be left in the hands of the military.

[36] Sir Kenneth Newman, the RUC Chief Constable, claimed instead that the British Army practice, since 1975, of supplying their garrisons in South County Armagh by helicopter gave too much freedom of movement to the IRA.