Between 16 and 19 July, Spanish forces converged on the French positions stretched out along villages on the Guadalquivir and attacked at several points, forcing the confused French defenders to shift their divisions this way and that. With Castaños pinning Dupont downstream at Andújar, Reding successfully forced the river at Mengibar and seized Bailén, interposing himself between the two wings of the French army. Caught between Castaños and Reding, Dupont attempted in vain to break through the Spanish line at Bailén in three bloody and desperate charges, suffering 2,000 casualties, including himself wounded. With his men short of supplies and without water in sweltering heat, Dupont entered into talks with the Spanish.

Vedel finally arrived, but too late. In the talks, Dupont had agreed to surrender not only his own but Vedel's force as well even though the latter's troops were outside the Spanish encirclement with a good chance of escape; a total of 17,000 men were captured, making Bailén the worst defeat suffered by the French in the entire Peninsular War. The men were to be repatriated to France, but the Spanish did not honor the surrender terms and transferred them to the island of Cabrera, where most died of starvation.

When news of the catastrophe reached Joseph Bonaparte's court in Madrid, the result was a general retreat to the Ebro, abandoning much of Spain to the insurgents. France's enemies throughout Europe cheered at this first major defeat inflicted to the hitherto unbeatable French Imperial army. "Spain was overjoyed, Britain exultant, France dismayed, and Napoleon outraged. It was the greatest defeat the Napoleonic empire had ever suffered, and, what is more, one inflicted by an opponent for whom the emperor had affected nothing but scorn."—tales of Spanish heroism inspired Austria and showed the force of nationwide resistance to Napoleon, setting in motion the rise of the Fifth Coalition against France.