The roots of the battle lay in the aftermath of Russia's defeat at the Battle of Nanshan, which had exposed Port Arthur to encirclement. Alekseyev pressed for an immediate counteroffensive, but Kuropatkin wanted to wait in Mukden for reinforcements arriving via the Trans-Siberian Railway. The disagreement escalated to the highest levels of the Russian government before Tsar Nicholas II overruled his field commander. Kuropatkin complied, but without conviction. Stackelberg's First Siberian Army Corps marched south from Liaoyang along the railway line, tasked with recapturing Nanshan and advancing on Port Arthur -- but with the contradictory instruction to "avoid any decisive action against superior forces." Meanwhile, Japanese General Oku Yasukata had restructured his Second Army into the 3rd, 4th, and 5th Divisions, fielding 36,000 infantry, 2,000 cavalry, and 216 artillery pieces. The Japanese force was larger, better equipped, and had a clear objective.

Stackelberg entrenched his forces astride the railway south of Te-li-Ssu, occupying the high ground with reasonable prospects for defense. Oku, however, had no intention of charging uphill into Russian guns. He advanced his 3rd and 5th Divisions along the center as a feint, keeping the Russians focused on a frontal threat, while the 4th Division moved rapidly westward through the Fuchou valley to envelop Stackelberg's right flank. Russian outposts detected the flanking movement, but misty weather prevented them from using their heliographs to warn headquarters in time. Stackelberg, misjudging the direction of the main threat, committed his reserves to his left flank instead. It was a costly mistake that left his right side exposed to the very attack he should have been reinforcing against.

Skirmishing continued through the night of June 14. Both commanders planned decisive blows for the morning. But while Oku issued clear written orders for a dawn assault, Stackelberg gave only verbal instructions and left the timing vague. His subordinate commanders, unsure when to attack, did not move until around 07:00 on June 15. Only about a third of the First East Siberian Rifle Division actually committed to the counterattack under Lieutenant General Aleksandr Gerngross. The partial assault surprised the Japanese 3rd Division briefly but collapsed quickly. Then came panicked reports of a strong Japanese attack on the exposed right flank. The Russians began falling back, abandoning their artillery as Oku's 4th and 5th Divisions pressed the advantage. Stackelberg ordered retreat at 11:30, but fierce fighting continued past 14:00. A sudden torrential rainstorm finally slowed the Japanese pursuit, allowing Stackelberg to extricate what remained of his battered force toward Mukden.

Russian casualties reached at least 3,500 -- 477 killed, 2,240 wounded, and 754 missing -- though some estimates run as high as 10,000. Japanese losses totaled 1,163: 217 killed and 946 wounded. The disparity reflected not just the outcome of the battle but the consequences of fighting with divided command, unclear objectives, and verbal orders against an opponent who knew exactly what it wanted. With Stackelberg's defeat, the only Russian offensive to relieve Port Arthur came to its disastrous end. The Japanese advance against the fortress began in earnest. In a grim footnote, on the same day as the battle, Russian cruisers from Vladivostok sank two Japanese troop transports off the coast of Japan, killing over 2,000 soldiers and costing the Japanese siege guns badly needed at Port Arthur -- a reminder that the war at sea was extracting its own terrible price.