Japanese forces, mainly the 5th Division and 11th Independent Mixed Brigade, moved out from Beiping and advanced on Huailai County in Chahar. A Japanese column advanced quickly into Shanxi, making use of the railway which the Chinese did not attempt to destroy. The Chinese abandoned Datong on 13 September, falling back to a line from Yanmen Pass on the Great Wall east to the mountain pass of Pingxingguan. Yan Xishan's troops became more demoralised as the Japanese exerted their air supremacy.

The main body of the Japanese 5th Division, under the command of Itagaki Seishiro, advanced from Huaili to invade northeastern Shanxi. Although it had a motorised transport column, its rate of advance was limited by the poor roads. By the time they reached the Shanxi border, Lin Biao's 115th Division, after a forced march from Shaanxi, was in place at Pingxingguan on 24 September to ambush the Japanese army.

After a series of easy victories against their opponents, they failed to take elementary precautions. Japanese commanders seldom repeated the operational blunders that had led to Pingxingguan. Nonetheless, the battle gave the Chinese a major boost in morale and credence to the Communists in the eyes of the people. The battle was constantly cited by CPC leaders as an example of their commitment to battling the Japanese occupation, even though Mao had opposed the battle, according to an account written by Lin Biao in Russia (where he was being treated for bullet wounds) and Lin had undertaken it on his own authority.