The British had captured the peninsula of Stony Point in May 1779, and began to fortify it by cutting down trees, and by erecting an earthen fort and two barriers called abatis. In addition, two British ships offered extra protection, and the newly-captured fort at Verplanck's Point, across the river, could be signaled by rocket for reinforcements. The commander of the garrison at Stony Point felt certain that his defenses were secure, calling the new fort his "little Gibraltar."

Washington responded to Clinton's move by marching his troops north from Middlebrook, New Jersey, to protect the American fortifications at West Point. Clinton garrisoned Stony Point and Verplanck's Point with about 1,000 men to protect the King's Ferry, which crossed the Hudson River between the two posts. Clinton then launched raids against Connecticut coastal towns, in the continuing attempt to lure Washington into battle.

Clearly, the British could not be allowed to remain unopposed at Stony Point, and by early July, Washington observed the enemy works himself from nearby Buckberg Mountain and devised a plan. Brigadier General Anthony Wayne would lead a surprise midnight assault against Stony Point. Wayne commanded the Corps of Light Infantry, a select force which probed enemy lines, fought running skirmishes, and defended the army against sudden attack. The Light Infantry was comprised of the very best soldiers, each regiment producing one company, which then served on detached duty.

The Battle on July 15, 1779, Wayne's troops began their march from Fort Montgomery, near the present-day Bear Mountain Bridge. For eight hours they struggled over narrow mountain trails, arresting civilians they encountered en route to avoid detection. When the soldiers arrived at Sprintsteel's Farm, two miles from Stony Point, they were told for the first time about their mission. One column of 300 men would wade through the marshes from the north. A second column, led by Wayne, would wade through the waters of Haverstraw Bay and approach from the south. Each of these two columns would consist of three parts: twenty men called "the forlorn hope" who would enter the enemy lines first, overcome sentries and cut through the abatis; an advance party which would enter the fort and seize its works; and the main body, which would continue around the unfinished back of the fort and approach it from the river.

Soldiers in these two attacking columns wore pieces of white paper in their hats to avoid confusion in the darkness, and were armed with unloaded muskets and fixed bayonets, so that an accidental shot would not reveal their presence and reduce the element of surprise. When they entered the enemy fort they would shout the watchword "the Fort's Our Own" to signal their comrades-in-arms. Finally, twenty-four artillery men would accompany the Light Infantry, so that captured enemy cannon could be turned against the British ships and their other fort at Verplanck's Point.

To create a diversion, a third column of two companies of Light Infantry would be positioned near the center of Stony Point peninsula and in front of the fort's defenses, where they would divert the enemy's attention by firing musket volleys. On a dark and windy midnight, the northern and southern attacking columns forded the marshes separating Stony Point from the mainland. The two columns swept up the treeless slopes, arriving in the fort within minutes of each other.

The heaviest fighting lasted half an hour, and by 1AM the garrison had surrendered. Fifteen Americans had been killed. Twenty British had also died, and the remainder were taken prisoners. "Our officers and men behaved like men who are determined to be free," reported Wayne, who received a slight head wound. Three days later, Washington abandoned Stony Point because he knew it could not be defended against the combined might of the British army and navy.

Although they returned to Stony Point and rebuilt the fort, British troops were withdrawn in October because of insufficient reinforcements, and never again threatened the Hudson Highlands. The victory at Stony Point was the last major battle in the north, and boosted American morale. Clinton's plan to defeat the Continentals and end the war had failed.