The Battle of Gratangen was part of the broader Narvik Campaign, the fight for control of the iron ore port that both Germany and the Allies considered strategically vital. On 9 April 1940, ten German destroyers carried General Eduard Dietl's task force into the Ofotfjorden. They seized Narvik and the military depot at Elvegardsmoen in the early hours, sinking Norway's coastal defense ships and bluffing the land garrison into surrender. The Royal Navy struck back hard. In two naval battles, every one of the ten German destroyers was sunk. The roughly 2,900 German sailors who survived were given captured Norwegian equipment from Elvegardsmoen and pressed into service as infantry alongside Dietl's mountain troops, the Gebirgsjager. Meanwhile, the Norwegian 6th Division, under General Carl Gustav Fleischer, mobilized to push the Germans back.

Fleischer's plan called for a two-pronged advance. The Second Battalion, Fifteenth Infantry Regiment would attack the German forward positions on the hill of Lapphaugen with artillery support. The First Battalion, Twelfth Infantry Regiment would make a surprise march over Fjordbotneidet to hit the German main positions at Gratangsbotn from an unexpected direction. The Alta Battalion, an independent unit, was held in reserve. On 24 April, the attack on Lapphaugen began but stalled in extreme weather and German resistance. What neither the Norwegians nor the Germans fully realized was that the defenders had decided to abandon both Lapphaugen and Gratangsbotn. In the foul conditions, the withdrawal went unnoticed. The Second Battalion did not push forward. The First Battalion arrived at Gratangsbotn to find it deserted.

Gratangsbotn sits at the bottom of a geographic kettle, with dominating high ground on every side. It is, in military terms, a deathtrap for any force that occupies it without controlling the ridges above. The exhausted Norwegians settled into the available shelter without establishing a defensive perimeter. The Germans saw their opportunity and struck with a force of just 165 men. They used Norwegian civilians as human shields during the approach, a tactic that would embitter Norwegian forces for the remainder of the campaign. Despite being outnumbered, the Germans suppressed the surprised Norwegians with mortars and heavy machine guns. Three of the battalion's five company commanders were killed in action. A fourth was wounded. The fifth, suffering from snow-blindness, could not participate. The survivors retreated, and the battalion was later reorganized as a reduced formation with two rifle companies and one support company.

The German victory at Gratangsbotn was tactically complete but strategically hollow. The fresh Alta Battalion, commanded by Arne Dagfin Dahl, pressed south from the north while the Second Battalion resumed its advance over Lapphaugen. The Germans recognized that their position in Gratangen was untenable and abandoned it soon after the battle. But the consequences of that April morning extended far beyond the tactical outcome. Before Gratangen, the inexperienced Norwegian soldiers had often hesitated to fire on the enemy. After Gratangen, that hesitation vanished. The German use of civilians as human shields, the ambush of sleeping men, the lopsided casualties, thirty-four Norwegians killed against six Germans, all of it hardened the 6th Division into a fighting force that would go on to push Dietl's troops back toward Narvik in the weeks that followed. Gratangen was where the Norwegian campaign stopped being tentative and became a war.