The massacre grew from exhaustion. Lord Cornwallis had chased Nathanael Greene's Continental Army across North Carolina in what historians call the Race to the Dan, a grueling pursuit in which Cornwallis burned his own baggage train at Ramsour's Mill near Lincolnton to travel faster. It did not help. Greene used a screening column under Colonel Otho Williams to decoy the British toward Dix's Ferry while the main American force crossed the Dan River at Irwin's and Boyd's ferries. Henry Lee's cavalry crossed last, roughly two hours before the British arrived to find every boat gone. Stranded, Cornwallis marched his starving, freezing men south to Hillsborough, where he set up headquarters on February 21 and issued calls for Loyalist volunteers to rally to the Crown.

Dr. John Pyle answered the call, gathering between 300 and 400 men from the countryside. He requested a British escort, and Cornwallis dispatched Tarleton with cavalry and infantry, about 450 men, to guide the Loyalists safely to camp. Meanwhile, Greene had sent Lee and Colonel Andrew Pickens back across the Dan to monitor British movements. On February 24, Lee's men captured two British staff officers and learned that Tarleton was only a few miles ahead. Then fate intervened. Two of Pyle's scouts encountered Lee's Legion and, seeing the green jackets, assumed they were Tarleton's dragoons. Lee seized the advantage. He instructed Pickens' riflemen to flank Pyle's position, then rode into the Loyalist camp as if arriving as the expected escort.

Accounts pieced together from Lee and Captain Joseph Graham suggest the deception was accidental. Lee's original target was Tarleton, the more important objective. The violence erupted at the rear of the column when Captain Eggleston, unfamiliar with local badges of allegiance, questioned a Loyalist and received the wrong answer. Pickens' riflemen joined the attack; the cavalry wheeled and charged. Pyle's men broke and ran, many cut down in the first exchange. Others, believing the assault was a mistake, kept insisting they served King George, to no avail. Local legend holds that Pyle himself was badly wounded and crawled into a nearby pond, hiding until friends could rescue him. After recovering, he surrendered to the local militia and was later pardoned for his care of wounded Patriots.

Cornwallis ordered Tarleton to rejoin the main army that night, so Pickens and Lee never caught the British dragoons they had originally been hunting. But the massacre achieved something more lasting than a battlefield victory. Word of Pyle's destruction spread through the Carolina backcountry, and Loyalist recruitment collapsed. Cornwallis reported to Lord Sackville that Pyle's men had been 'inhumanly butchered, when begging for quarters, without making the least resistance.' Lee countered in his memoirs that he had let the survivors flee rather than pursuing them. Whatever the moral reckoning, the strategic effect was clear. Three weeks later, at the Battle of Guilford Courthouse on March 15, 1781, Cornwallis fought with diminished numbers and brittle morale. The site of the massacre, once marked with a stone placed in 1880, has since lost its marker. Only periwinkle and cedar trees still mark the ground where the dead were buried in mass graves.