Following Brandywine, Howe split his forces sending Cornwallis after Washington at Chester. After learning that Howe was moving towards the American depot at Valley Forge Washington attempted a blocking action. Howe came full force against Washington. The British threatened both of Washington's flanks. Just when the battle started a sudden torrential downpour came halting the battle and perhaps saving Washington's army from a catastrophic defeat. This was called the battle of the Clouds.

Washington retreated West to Yellow Springs but had to ultimately go on to Warwick Furnice to obtain dry powder and other supplies. Meanwhile, Howe continued on to Valley Forge. With Washington now unable to block Howe from reaching either Valley Forge or Philadelphia, Howe headed for Philadelphia and on the way settled in Germantown.

Meanwhile, Washington left Wayne's unit near Paoli Tavern to fall upon Howe's baggage train. Unfortunately, Howe captured some communication messages and Tory spies betrayed Wayne's passwords.

Howe took advantage of this opportunity by dispensing Major General Charles Grey and his unit to Paoli's Tavern to destroy Wayne's forces by "bayonets only" as the order stipulated. The British attacked at one o'clock in the morning, easily pushing through Wayne's pickets because they had the passwords provided by the Tory spies. When the alarm came, Wayne had his men up and moving in a matter of minutes, but in the confusion orders were misunderstood and the units were silhouetted by the light of their own camp fires. Grey's men smashed into the American camp bayoneted Grey and his men. The effect was grim. In close action, the bayonet was a fearsome weapon. Many Americans didn't have them and couldn't reload in time to resist. One British solider remembered afterwards that he had stuck so many men that blood ran out of the touch-hole of his musket.

Fifty-three Americans were killed and 100 wounded, the rest fled. The British suffered 4 killed and 7 wounded. For this reason, Wayne called the engagement a massacre. But the British forces were really guilty of no offense beyond a lop sided success in battle.

Following this battle, and using a little trickery, the British were able to march into Philadelphia September 26th; but the Congress had already fled. Howe then stationed his main force at Germantown, some five miles northwest of Philadelphia. He refused to allow his troops to fortify their positions lest the move be interpreted as a sign of weakness. Thus, the opportunity was set.