After working through the summer and enlisting the help of upstate New York shipwrights through offerings of extra pay, the American managed to build three 10-gun galleys and eight 3-gun gundalows. At the end of September, General Benedict Arnold began to anticipate the arrival of more powerful British fleets. He positioned his inexperienced fleet behind Valcour Island in hopes of gaining a positional advantage in battle. On October 11, Arnold sent out his ships Congress and Royal Savage in order to draw the attention of the British fleet. After exchanging gunfire, Congress was able to return to position, while Royal Savage battled headwinds, leading to the Americans abandoning the ship on the southern tip of the island, and the ship being boarded by the British. Facing treacherous winds, many of the British boats were unable to assist Sir Guy Carleton in the battle against the Americans, leading the Americans to focus fire on Carleton. Late in the battle, British ship Inflexible joined the fight and began picking away Arnold's forces.
Seeing no other option, Arnold began to plan an escape route to Crown Point. Utilizing the darkness and fog, he successfully maneuvered the Americans past the British line, reaching Schuyler Island. Carleton angrily pursued the Arnold after discovering his escape, forcing the slow moving Arnold to abandon his battered ships. The Americans lost 80 men and suffered 120 captures during the battle in addition to 11 of 16 vessels, while British forces lost 40 men and 3 gunboats.