The roots of the battle lay in a secret treaty. In 1461, John of Islay had conspired with Edward IV of England to partition Scotland -- a scheme that, when exposed to the Scottish crown in 1474, cost him his earldom, his sheriffdoms, and his credibility among his own kin. James III stripped John of everything except his core lands and the title Lord of the Isles, which was now a crown grant rather than a self-assumed birthright. The Lordship had always depended on territorial expansion to sustain its warrior culture. With that engine now thrown into reverse, the internal tensions erupted in the person of Angus Og, John's son. According to Hugh Macdonald's chronicle, Angus ejected his father from the leadership of the clan and from his own home, forcing the Lord of the Isles to seek shelter under an old upturned boat.

John gathered his remaining supporters for a desperate attempt to crush his son's rebellion. His fleet included men from Clan MacLean, Clan MacLeod, and Clan MacNeil. Angus Og drew his strength from the MacDonalds of Clanranald, the MacDonalds of Sleat, the MacDonalds of Keppoch, and the MacLeods of Lewis. The two fleets met in the early 1480s off Mull's northwest coast. The fighting was savage. William Dubh MacLeod, chief of Clan MacLeod, was killed early in the battle, and his men began to waver. A priest named Callum Clerich ordered the keeper of the Fairy Flag -- the MacLeods' sacred banner, believed to possess supernatural protective powers -- to unfurl it. The Bannatyne Manuscript records that the MacLeods of Lewis, seeing the sacred flag, switched sides to support John. But the battle's outcome was already decided. Angus Og won the day. Hector Odhar Maclean, John's naval commander, was captured. Nearly half the clan's galley fleet was sunk.

Angus Og's triumph proved pyrrhic in the fullest sense. He seized power from his father and held it for a decade, but the cost was crippling. The dead clansmen could not be replaced. The sunken galleys represented an irreplaceable loss of naval power. The Lordship of the Isles, which had ruled the western seaboard as a semi-independent kingdom for centuries, never recovered its former strength. Angus himself was murdered in 1490 by his own harper, according to some traditions. His father John, the last acknowledged Lord of the Isles, had his title formally forfeited in 1493. The power vacuum left by the lordship's collapse plunged the western Highlands into generations of clan warfare. Bloody Bay, that stretch of water north of Tobermory where father and son tore each other's fleet to pieces, became a monument to the self-destructive potential of ambition unchecked by loyalty.