Ferguson had arrived in North Carolina in early September 1780 to recruit troops for the Loyalist militia and protect the flank of Lord Cornwallis's main force. Ferguson challenged Patriot militias to lay down their arms or suffer the consequences. In response, the Patriot militias led by Benjamin Cleveland, James Johnston, William Campbell, John Sevier, Joseph McDowell and Isaac Shelby rallied to attack Ferguson and his forces.

Receiving intelligence on the oncoming attack, Ferguson decided to retreat to the safety of Lord Cornwallis's army. However, the Patriots caught up with the Loyalists at Kings Mountain near the border with South Carolina. Achieving a complete surprise, the Patriot militiamen attacked and surrounded the Loyalists, inflicting severe casualties. After an hour of battle, Ferguson was fatally shot while trying to break the Patriot line, after which his men surrendered. Some Patriots gave no quarter until their officers re-established control over their men; they were said to be seeking revenge for alleged killings by Banastre Tarleton's militiamen at the Battle of Waxhaws, under the slogan "Remember Tarleton's Quarter". Although victorious, the Patriots had to retreat quickly from the area for fear of Cornwallis' advance. Later they executed nine Loyalist prisoners after a short trial.

The battle was a pivotal event in the Southern campaign. The surprising victory of the American Patriot militia over the Loyalists came after a string of Patriot defeats at the hands of Lord Cornwallis, and greatly raised the Patriots' morale. With Ferguson dead and his Loyalist militia destroyed, Cornwallis transferred his army into North Carolina and eventually Virginia.