The battle was in the Yellow Sea off the mouth of the Yalu River and not in the river itself. There is no agreement among contemporary sources on the exact numbers and composition of each fleet, but both were of a similar size, and the battle is considered to be one of the Imperial Japanese Navy's greatest victories.

Japan's initial strategy was to gain command of the sea, which was critical to its operations in Korea. Command of the sea would allow Japan to transport troops to the mainland. The Imperial Japanese Army's Fifth Division would land at Chemulpo on the western coast of Korea, both to engage and push Chinese forces northwest up the peninsula and to draw the Beiyang Fleet into the Yellow Sea, where it would be engaged in decisive battle.

With tensions with Japan increasing over the situation on the Peninsula, the Chinese government chartered three steamers to carry reinforcements to Korea in late July to bolster their position in Korea. The three troopships were escorted by three naval vessels, the cruiser Jiyuan and the gunboats Kwang-yi and Tsao-kiang. A Japanese force consisting of the cruisers Akitsushima, Yoshino and Naniwa intercepted the three Chinese warships off Pungo Island, precipitating the action. Within one hour, the engagement which ended in a Japanese victory, Jiyuan was forced to flee, Kwang-yi became stranded on a shoal and Tsao-kiang had been captured. Although the first two of the three troopships arrived safely in Korea, on 25 July 1894, Naniwa intercepted the third, Kowshing, which was carrying 1,200 Chinese troops. When the Chinese troops on board refused to surrender or to be interned Naniwa sank the vessel. Over 800 Chinese soldiers died in the action.

Admiral Ding Ruchang had learned about the engagement at Pungdo on the morning of 26 July, when at 6.00am, the damaged cruiser Jiyuan arrived at Weihaiwei. Although the Chinese admiral had not been aware of the sinking of Kowshing, he considered the destruction of Kwang-yi and shelling of Jiyuan as an act of war. On the same day, without even notifying Li Hongzhang, he left Weihaiwei with eleven warships and seven torpedo boats and headed for the Korean coast, while the damaged Jiyuan sailed to Port Arthur for repairs. After arriving in Korean waters on the morning of the following day, the Chinese ships cruised the area looking to engage the enemy. However, the abrupt change in the weather made the patrolling of the Korean waters more arduous, especially for the small torpedo boats and consequently the Chinese fleet returned to Weihaiwei on 28 July. The Chinese warships immediately resupplied themselves with coal while the weather improved, and the main force of the Beiyang Fleet was put to sea again on the following day but without the torpedo boats, heading for the Korean coast. This second cruise lasted longer, until 3 August, but the fleet did not encounter the Japanese. At the beginning of September, Li Hongzhang decided to reinforce the Chinese forces at Pyongyang, by employing the Beiyang Fleet to escort transports to the mouth of the Taedong River. About 4,500 additional troops were to be redeployed, these had been stationed in the Zhili. On 12 September, half of the troops embarked at Dagu on five specially chartered transports and headed to Dalian where two days later, on 14 September, they were joined by another 2,000 soldiers. Initially, Admiral Ding wanted to send the transports under a light escort with only a few ships, while the main force of the Beiyang Fleet would locate and operate directly against Combined Fleet, in order to prevent the Japanese from intercepting the convoy. However, the appearance near Weihaiwei of the Japanese cruisers Yoshino and Naniwa, which were on reconnaissance sortie, thwarted these plans. The Chinese mistook them for the main Japanese fleet. Consequently on 12 September, the entire Beiyang Fleet departed Port Arthur, heading for Weihaiwei and arriving near the Shandong Peninsula the following day. The Chinese warships spent the entire day cruising the area, waiting for the Japanese. However, since there was no sighting of the Japanese, Admiral Ding decided to return to Port Arthur, arriving there in the morning of 15 September.

The Japanese victory at Pyongyang had succeeded in pushing Chinese troops north to the Yalu River, in the process removing all effective Chinese military presence on the Korean peninsula. Shortly before the convoy's departure, Admiral Ding received a message concerning the Battle at Pyongyang. Although it was rather inaccurate, it informed him about the defeat and subsequently made the redeployment of the troops to near the mouth of the Taedong River unnecessary. Admiral Ding, who then correctly assumed that the next Chinese line of defence would be established on the Yalu River, decided to redeploy the embarked soldiers there. On 16 September, at about 1:00 am, the convoy of five transport ships departed from the Dalian Bay under escort from the main force of the Beiyang Fleet which included the ironclad battleships Dingyuan and Zhenyuan, the small coastal defence battleship Pingyuan, the cruisers Jingyuen, Laiyuan, Jiyuan, Jingyuan and Zhiyuen, the small cruisers Yangwei, Chaoyong and Kwan Chia, torpedo gunboat Guangbing, the gunboats Zhennan and Zhenzhong as well as the torpedo boats Fulong and Zuo 1. They reached the mouth of the Yalu River at about 14.00pm. The transports, escorted by Pingyuan, Guangbing, Zhennan, Zhenzhong, together with both torpedo boats, immediately steamed up the river and dropped their anchors approximately 12–13 nautical miles (22–24 km) from the mouth of the Yalu. The troops were disembarked and the landing operation lasted until the morning of 17 September. Meanwhile, the remaining warships of the Beiyang Fleet anchored in shallow waters about 7–8 nautical miles (13–15 km) from the shore, south-west of the mouth of the river, where they remained for the rest of the day and the entire night. On 17 September, at 9:20 am, the fleet left its position and conducted a one-and-a-half-hour training exercise before returning to their previous anchorage. Soon thereafter, at 11:28 am, observers on board the Chinese warships spotted smoke from unknown vessels heading from the south-west.

The remnants of the Beiyang Fleet retired into Lüshunkou for repairs, but were withdrawn to Weihaiwei to avoid a second encounter with the Japanese fleet during the Battle of Lüshunkou. The Japanese did not pursue the retreating ships, as Dingyuan and Zhenyuan were only slightly damaged, and the Japanese had no way of knowing that the battleships suffered from a lack of ammunition. What remained of the Beiyang Fleet was finally destroyed during a combined Japanese land and naval attack at Weihaiwei.