After the Battle of Pylos, which resulted in the isolation of over 400 Spartan soldiers on the island of Sphacteria, Sparta sued for peace, and, after arranging an armistice at Pylos by surrendering the ships of the Peloponnesian fleet as security, sent an embassy to Athens to negotiate a settlement. These negotiations, however, proved fruitless, and with the news of their failure the armistice came to an end; the Athenians, however, refused to return the Peloponnesian ships, alleging that assaults had been made against their fortifications during the truce.

The Spartans, under their commander Epitadas, attempted to come to grips with the Athenian hoplites and push their enemies back into the sea, but Demosthenes detailed his lightly armed troops, in companies of about 200 men, to occupy high points and harass the enemy with missile fire whenever they approached. When the Spartans rushed at their tormentors, the light troops, unencumbered by heavy hoplite armor, were easily able to run to safety.

A stalemate took hold for some time, with the Athenians trying unsuccessfully to dislodge the Spartans from their strong positions. At this point, the commander of the Messenian detachment in the Athenian force, Comon, approached Demosthenes and asked that he be given troops with which to move through the seemingly impassable terrain along the island's shore. His request was granted, and Comon led his men into the Spartan rear through a route that had been left unguarded on account of its roughness. When he emerged with his force, the Spartans, in disbelief, abandoned their defenses; the Athenians seized the approaches to the fort, and the Spartan force stood on the brink of annihilation.

At this point, Cleon and Demosthenes declined to push the attack further, preferring to take as many Spartans as they could prisoner. An Athenian herald offered the Spartans a chance to surrender, and the Spartans, throwing down their shields, agreed at last to negotiate.

Of the 440 Spartans who had crossed over to Sphacteria, 292 survived to surrender; of these, 120 were men of the elite Spartiate class. "The outcome," Donald Kagan has observed, "shook the Greek world." Spartans, it had been supposed, would never surrender. Sphacteria had changed the nature of the war.