Throughout 1857, British forces began to assemble in Hong Kong, joined by a French force. In December 1857 they had sufficient ships and men to raise the issue of the non-fulfilment of the treaty obligations by which the right of entry into Canton had been accorded. Sir Harry Parkes delivered an ultimatum, supported by Hong Kong governor Sir John Bowring and Admiral Sir Michael Seymour, threatening on 14 December to bombard Canton if the men were not released within 24 hours.

The remaining crew of the Arrow were then released, with no apology from Viceroy Ye Mingchen who also refused to honour the treaty terms. Seymour, Major General van Straubenzee and Admiral de Genouilly agreed the plan to attack Canton as ordered. This event came to be known as the Arrow Incident and provided the alternative name of the ensuing conflict.

The Second Battle of Canton was fought between British and Chinese forces in Canton (Guangzhou), Guangdong province, China, in May 1841 during the First Opium War.

On May 21 Chinese forces attempted a night ambush on British positions in the hills to the north of Canton but were repelled. By 2:00 am on the 24th a contingent of naval and land units under Maj. Gen. Hugh Gough assembled, ready to attack the city. When the advance sounded, the troops attacked, captured the four forts with comparatively small losses, and within a half-hour "British troops looked down on Canton within 100 paces of its walls."

British forces prepared once more for the attack on Canton. This time, a message arrived from Charles Elliot announcing that he had come to an agreement with the governor-general of Canton, Yu Baochen according to the following key points:

Although the British were delayed by the Indian Rebellion of 1857, they followed up the Arrow Incident in 1856 and attacked Guangzhou from the Pearl River. Viceroy Ye Mingchen ordered all Chinese soldiers manning the forts not to resist the British incursion. After taking the fort near Canton with little effort, the British Army attacked Canton.

Gough was to hold his position until further notice. What happened next became known as the Sanyuanli Incident and involved a small contingent of British troops suffering minor casualties as a result of attacks by a Chinese mob incensed at the presence of foreign troops in their country. The city surrendered shortly thereafter and paid the British as agreed. As a result, Canton was not totally destroyed, although after the battle elements of the British forces looted the city. Chinese reinforcements from other nearby cities and counties retreated from Canton on May 28. At the same time the British also withdrew. By June 1 all British forces had left the Canton area.

The capture of Canton, on 1 January 1858, a city with a population of over 1,000,000 by less than 6,000 troops, resulted in the British and French forces suffering 15 killed and 113 wounded. 200-650 of the defenders and inhabitants became casualties. Ye Mingchen was captured and exiled to Calcutta, India, where he starved himself to death.

Meanwhile, in Hong Kong, there was a possible attempt to poison John Bowring and his family in January, known as the Esing Bakery incident. However, if it was deliberate, the baker who had been charged with lacing bread with arsenic bungled the attempt by putting an excess of the poison into the dough, such that his victims vomited sufficient quantities of the poison that they had only a non-lethal dose left in their system. Criers were sent out with an alert, preventing further injury.

When known in Britain, the Arrow incident (and the British military response) became the subject of controversy. The British House of Commons on 3 March passed a resolution by 263 to 249 against the Government saying:

That this House has heard with the concern of the conflicts which have occurred between the British and Chinese authorities on the Canton River; and, without expressing an opinion as to the extent to which the Government of China may have afforded this country cause of complaint respecting the non-fulfilment of the Treaty of 1842, this House considers that the papers which have been laid on the table fail to establish satisfactory grounds for the violent measures resorted to at Canton in the late affair of the Arrow, and that a Select Committee be appointed to inquire into the state of our commercial relations with China.

In response, the Whig Prime Minister Lord Palmerston attacked the patriotism of the Whigs who sponsored the resolution, and Parliament was dissolved, causing the British general election of March 1857.

The Chinese issue figured prominently in the election, at which Palmerston won an increased majority, silencing the voices within the Whig faction who supported China. The new parliament decided to seek redress from China based on the report about the Arrow Incident submitted by Sir Harry Parkes. The French Empire, the United States, and the Russian Empire received requests from Britain to form an alliance.