From June 1937, Japanese troops carried out intensive military training maneuvers in the vicinity of the western end of the Marco Polo Bridge. These were held every night (other foreign garrison troops seldom held night maneuvers), and the Chinese government requested that advance notice be given so that local inhabitants would not be disturbed. The Japanese agreed to this condition. However, on the night of July 7, 1937, night maneuvers were carried out without prior notice, greatly alarming the local Chinese forces. Chinese troops, thinking an attack was underway, fired a few ineffectual rifle shots, leading to a brief exchange of fire at approximately 23:00. When a Japanese soldier failed to return to his post, his company commander, Major Kiyonao Ichiki, thought that the Chinese had captured him, and reported the incident to his regimental commander, Colonel Renya Mutaguchi. Chinese regimental commander Ji Xingwen (219th Regiment, 37th Division, 29th Route Army) received a telephone message from the Japanese demanding permission to enter Wanping to search for the missing soldier.
At 23:40, General Qin Dechun, acting commander of the 29th Route Army and Chairman of the Hebei-Chahar Political Council was contacted by Japanese military intelligence with the same demand. He responded that in his opinion, the Japanese had violated China's sovereignty by conducting maneuvers without advanced notice, and refused the Japanese demand for entry into Wanping. However, Qin said that he would order Chinese troops stationed at Wanping to conduct a search on their own behalf with an attached Japanese officer. The Japanese were satisfied with the reply, but while both sides prepared their investigators, a unit of Japanese infantry attempted to breach Wanping's defences and were repulsed. An ultimatum by the Japanese was issued two hours later. As a precautionary measure, Qin contacted 37th Divisional commander General Feng Zhian to place his troops on heightened alert.
At around 03:30 on the morning of 8 July, Japanese reinforcements in the form of four mountain guns and a company of machine gunners arrived from nearby Fengtai. The Chinese also rushed an extra division of troops to the area. At around 04:50, two Japanese investigators were allowed into Wanping. However, notwithstanding the presence of the Japanese investigators within the town, the Japanese Army opened fire with machine guns at around 05:00. Japanese infantry backed with armored vehicles attacked the Marco Polo Bridge, along with a modern railroad bridge to the southeast of town.
Colonel Ji Xingwen led the Chinese defenses with about 1000 men, with orders to hold the bridge at all costs. After inflicting severe casualties, the Japanese forces partially overran the bridge and its vicinity in the afternoon, but the reinforced Chinese soon outnumbered the Japanese. Taking advantage of mist and rain on the morning of 9 July, the Chinese were able to retake the bridge by 06:00. At this point, the Japanese military and members of the Foreign Service began negotiations in Beijing with the Chinese Nationalist government. A verbal agreement with General Qin was reached, whereby an apology would be given by the Chinese; punishment would be dealt to those responsible; control of Wanping would be turned over to the Hopei civilian constabulary and not with the 219th Regiment; and better control of "communists" in the area. This was agreed upon, though Japanese Garrison Infantry Brigade commander General Masakazu Kawabe initially rejected the truce and continued to shell Wanping against his superiors' orders for the next three hours until prevailed upon to cease and to move his forces to the northeast.
If the truce and ceasefire had remained in place, with both forces returning their original positions, the Marco Polo Bridge Incident would have ended as a minor skirmish. However, from midnight of July 9, Japanese and Chinese violations of the ceasefire began to increase, and a buildup of reinforcements on both sides continued, with four divisions of Chinese troops moved to the border, and three on the Japanese side. Confronted with the threat of another battle, General Kanji Ishiwara requested the Japanese government make public statements on the matter - which ironically were more hard-line than what the Kwantung Army had wished for. Prime Minister Fumimaro Konoe's statements threatened continued Japanese mobilization, even though Japan had begun pulling back its troops on the evening of the 11 July.
A lull in tension occurred when Lieutenant General Kanichiro Tashiro commander of Japanese China Garrison Army died of a heart attack on 12 July, and was replaced by Lieutenant General Kiyoshi Katsuki. Efforts to defuse the escalating conflict failed, largely due to actions by the Japanese Northern China Area Army commanders and militarists within the Imperial Japanese Army General Staff; Wanping was shelled on 20 July and full scale fighting erupted at Langfang on 25 July. After launching a bitter and bloody attack on the Japanese lines on the 27 July, General Sung was defeated and forced to retreat behind the Yongding River by the next day. The Japanese gave Sung and his troops "free passage", then moved in to pacify areas surrounding Beijing and Tianjin. However, the Japanese Army had been given orders not to advance further than the Yongding River. In a sudden 'volte-face', the Konoe government's foreign minister opened negotiations with Chiang Kai-Shek's government in Nanjing and stated: "Japan wants Chinese cooperation, not Chinese land." Nevertheless, negotiations failed to move further than preparation as, on 9 August 1937, a Japanese naval officer was shot in Shanghai instigating the war proper.