Louis marched to Dalmatia in July 1357. Split, Trogir, and Šibenik soon got rid of Venetian governors and yielded to Louis. After a short siege, Louis's army also captured Zadar with the assistance of its townspeople. Tvrtko I of Bosnia, who had succeeded Louis's father-in-law in 1353, surrendered western Hum to Louis, who claimed that territory as his wife's dowry.

In the Treaty of Zadar, which was signed on 18 February 1358, the Republic of Venice renounced all Dalmatian towns and islands between the Gulf of Kvarner and Durazzo in favor of Louis. The Republic of Ragusa also accepted Louis's suzerainty. The Dalmatian towns remained self-governing communities, owing only a yearly tribute and naval service to Louis, who also abolished all commercial restrictions that had been introduced during the Venetians' rule. The merchants of Ragusa were explicitly entitled to freely trade in Serbia even during a war between Hungary and Serbia.