The most commonly accepted account of the battle, pieced together from reports from Lee and Captain Joseph Graham, indicates that Lee's deception was purely chance, and that he had originally intended to avoid the Loyalists, intending instead to encounter Tarleton's Dragoons, the more important objective. The sounds of battle apparently commenced when the militia at the rear of Lee's Legion, recognizing the strips of red cloth on the hats of Pyle's men as the badge of Loyalists, alerted Captain Eggleston, who was new to the South and was not familiar with local Whig and Tory badges. When he asked one of the Loyalists which side he was on, the man replied "King George," and Eggleston responded by striking him on the head with his sabre. Seeing this, the militia joined in the attack. The Loyalists, believing the attack to be a mistake, continued insisting they were on King George's side, to no avail. After 10 minutes, the remaining Loyalists had fled, and ninety-three Loyalists were known to be dead, certainly more were wounded and others were seen being carried off by friends. According to local legend, John Pyle was badly wounded in the battle and crawled into a nearby pond where he concealed himself until he could be rescued. After recovering from his wounds, he surrendered to the local militia. Later they were pardoned as a result of Pyle's care for wounded patriots.
On the 24th, Pickens was joined by 100 N.C. militia under Col. William Moore. It was from Moore that he and Lee had learned of Pyle’s gathering.
Across the Dan, Maj. Gen. Nathaniel Greene learned of Tarleton's mission, and at once ordered two of his men, Lee and Brig. Gen. Andrew Pickens, to stop the British force. The Americans crossed the Dan that same night and pushed on through straggly forest and over unploughed meadows toward the Haw River, where they hoped to cut off Tarleton's advance. Early next morning they arrived at the Salisbury Road, eight miles west of Hillsboro. Tarleton, they learned, had already passed this spot, and so the Americans turned westward to follow him.
Lee had marched for a short distance when he met two young farmers on horseback. Cornwallis had dispatched reinforcements that morning to Tarleton, and these youths were scouts who had been set ahead of the reinforcements to locate Tarleton's camp. The scouts immediately mistook Lee's men for Tarleton's troop, since both Americans and Loyalists dressed in civilian clothes. Lee realized the advantage of this mistake. He thanked the scouts and told them to rejoin the reinforcements with "Colonel Tarleton's compliments," and to request that the British troops move off the road to let Tarleton's cavalry pass through.
As soon as the scouts had departed, Lee divided his men into several troops, placing one under the command of a Capt. Eggleston and another under Capt. Joseph Graham, and he himself took command of the third. Eggleston's troops circled through the woods, and Graham's men followed a short distance behind those under Lee and Pickens.
Lee came in sight of the British a short time later. They had drawn up along the right side of the road in review formation, sitting stiffly in their saddles with their rifles or muskets slung over their shoulders, and their eyes straight ahead. At the far end of the line sat Pyle, their commander, unaware that the advancing troops were not Tarleton's men.
Riding slowly past the Tories, his own troops close behind him, Lee nodded approvingly and smiled at his enemies. He reined his horse up in front of Pyle and returned the latter's salute. Pyle stretched out his hand in welcome. Some of the British at the far end of the formation now spotted Eggleston's men in the woods behind them. Without command they began to fire. Lee instantly dropped Pyle's hand and drew his own sword. Eggleston swooped out of the woods with his men who began a hand-to-hand battle with the Tories, slashing at them with their swords and firing their muskets. "Stop! Stop!" screamed Pyle, "You are killing your own men!"
His cry ended abruptly as an American sword knocked him from his horse. The dying Loyalists were still ignorant of what was happening. As each Patriot wheeled his horse to face a new opponent, he called out, "Whose man are you?" "The King's! The King's!" screamed the British, and the Patriot sword cut them down.
Finally, the confusion and panic subsided. A ghastly scene surrounded the Patriots. Lee had intended to surround Pyle's men and force them to surrender, but the British themselves had begun the battle.
As soon as he could reassemble his troops, Lee sent for one of the Tory prisoners for questioning. A middle-aged man was brought forward, bleeding profusely from a head wound. He stared at Lee, still believing him to be Tarleton. "God bless your soul!" he exclaimed, "Mr. Tarleton, you've just killed as good a parcel of subjects as His Majesty ever had!" The mistake angered Lee, "You damned rascal!" he shouted. "We are Americans, not British. I am Lee of the American Legion!"
Meanwhile, several of the wounded Britishers had reached the O'Neal Plantation, some two miles away, where Tarleton was camped. Without reinforcements Tarleton realized that he had no chance against the Patriots, and so he ordered camp broken at once and fled toward Hillsboro again. The Patriots arrived the next morning to find his camp deserted.