This ill-judged delay was of great importance to the inhabitants of St Jago, by giving them time to prepare for their defence. They could not at first believe it possible that Lautaro would have the audacity to undertake a march of three hundred miles beyond the Araucanian frontiers to attack their city; but undeceived by the refugees from Conception, and the daily reports of the ravages of the enemy in the territories of the Promaucians, they dispatched Juan Godinez with an escort of twenty-five horse into the Promaucian country to watch the motions of the enemy, and to send intelligence of his proceedings and designs. Godinez was unexpectedly attacked by a detachment of the Araucanians, and obliged to make a precipitate retreat to St Jago, with his numbers considerably diminished, and filled the capital with consternation and dismay at the intelligence of the near approach of their redoubted enemy. On this occasion the Araucanians took ten horses and some arms from the Spaniards, both of which were used by them in the succeeding actions.

Villagran, who was at this time unable to take the field in consequence of illness, sent his son Pedro against Lautaro with such troops as could be procured, and immediately proceeded to fortify all the approaches to the city of St Jago with strong entrenchments. In the mean time, young Villagran attacked the Araucanians in their fortified post. Instructed by their intrepid yet wary commander, the Araucanians pretended to take flight after a short resistance; but the Spaniards were no sooner entered into the abandoned inclosure, than they returned upon them with such impetuosity, that Pedro and his men were completely routed, and only the cavalry was able to escape by flight, all the infantry who had penetrated the Araucanian camp being put to death. After procuring reinforcements, young Villagran returned three several times to attack the camp of Lautaro, in all of which attempts he was repulsed with considerable loss. He now encamped his force in a low meadow on the banks of the river Mataquito, at no great distance from the entrenched post of Lautaro. The Araucanian general formed a plan for inundating the camp of the Spaniards during night, by turning upon them a branch of the river; but the Spaniards being informed of this design by a spy, withdrew to St Jago.

Having recovered from his illness, Villagran was solicited by the citizens of St Jago to exert himself to dislodge the Araucanians from their neighbourhood, as they every moment expected to see them at their gates. He accordingly, some time in the year 1556, set out from the city at the head of 196 Spaniards and 1000 Indian auxiliaries, in search of Lautaro. Instructed by his severe defeat at Mariguenu, Villagran resolved to attack the enemy by surprise; and quitting the direct road, he secretly directed his march towards the Araucanian encampment in the night by a private path under the guidance of a spy, and reached their entrenchments undiscovered at day-break. Lautaro, who had been on guard all night according to his usual custom, had just retired to rest when the alarm was given of the attack from the Spaniards. He hastened immediately to the spot, to observe the enemy and to issue his orders for defence; but at the moment of his arrival, a dart from the hand of one of the Indian auxiliaries pierced him to the heart. Encouraged by this fortunate event, which was soon known to the Spaniards, Villagran urged the assault of the entrenchments, and soon forced an entrance in spite of the Araucanians, who made an obstinate defence. Finding their post carried, the Araucanians retired to an angle of their works, determined rather to allow themselves to be cut in pieces than to surrender. In vain the Spanish commander repeatedly offered quarter; they continued fighting with the utmost obstinacy till every man of them was cut off, many of them even throwing themselves on the lances of the Spaniards, as if courting death in preference to submission. This victory, which was not obtained without considerable loss on the part of the Spaniards and their allies, was celebrated in St Jago and the other Spanish settlements with every demonstration of joy. The Spaniards felicitated themselves on being freed from a redoubted enemy, who at the early age of nineteen had already obtained so many victories over them, and who threatened to destroy their settlements in Chili, and even to harass them in Peru.

When the terror which this young hero had inspired was removed by his death, even his enemies extolled his valour and military talents, and compared him to the greatest generals who had figured in ancient times, calling him the Chilese Hannibal. To use the words of the abbe Olivarez:-"It is not just to depreciate the merit of one, who, had he been of our nation, we should have vaunted as a hero. If we celebrate the martial prowess of the Spanish Viriatus, we ought not to obscure the fame of the American Lautaro, as both valorously contended in arms for the liberties of their country."

For a long time the Araucanians lamented the untimely fate of the valiant Lautaro, to whom they owed all the success which their arms had hitherto atchieved, and on whose conduct and bravery they entirely relied for the preservation of their independence. His name is still celebrated in their heroic songs, and his actions are still proposed as the most glorious model for the imitation of their youth. Above all others, Caupolican felt and lamented the loss of his valiant associate. Far from thinking he had got free from a rival of his fame, he considered that he had lost his chief coadjutor in the glorious cause of restoring their nation to independence. Immediately on receiving the mournful intelligence, he quitted the siege of Imperial, though reduced to the last extremity, and returned with his army to defend the northern frontiers of Araucania, and to protect his country from the incursions of the Spaniards, as he learnt by his spies that they soon expected a large reinforcement of men and warlike stores from Peru under a new commander.

On learning the death of Valdivia, as formerly related, Philip II. gave charge of the government and conquest of Chili to Alderete, the agent who had been sent by Valdivia into Spain, and furnished him for this purpose with six hundred regular troops. During the voyage to the Tierra Firma, the ship was set on fire by accident, by his sister who was accustomed to read in bed; and of the whole number on board, Alderete and three soldiers alone escaped to Porto Bello. Overcome with grief and disappointment at this melancholy catastrophe, Alderete died soon after in the small island of Taboga in the gulf of Panama. When informed of this disaster, and of the threatening aspect of affairs in Chili in consequence of the untoward events in the Araucanian war, the marquis of Canete, then viceroy of Peru, appointed his son Don Garcia Hurtado de Mendoza, to the vacant government. As this charge had become both important and dangerous, the marquis resolved that his son should be accompanied by such a body of forces as might be able to support his authority, and might enable him successfully to terminate the war against the Araucanians. As the civil dissensions in Peru were now at an end, and that country abounded in military adventurers eager for employment, he was soon able to levy a respectable force of horse and foot for this expedition. The infantry, all well equipped and appointed, with a great quantity of military stores; embarked in ten ships under the command of Don Garcia in person; and the cavalry marched by land under the orders of Garcia Ramon, who was appointed quarter-master-general of Chili.

Don Garcia arrived with his fleet in safety in the Bay of Conception, in the month of April 1557, and came to anchor near the island of Quiriquina, which was chosen as the headquarters as a place of great security. The scanty population of the island attempted to oppose the disembarkation of the troops, but being soon dispersed by the artillery, they retired in their piraguas to the continent. A small number being made prisoners, the governor sent two or three of them with a message to the Araucanians, to inform them of his arrival, and that he was desirous to settle a lasting peace with them on fair terms. In an assembly of the Ulmens to deliberate upon this message, the general opinion was that no propositions ought to be listened to from an enemy who had returned in greater force than ever, under the idea that any terms they might propose would necessarily be treacherous and unfair. Old Colocolo observed, however, that no injury could arise from listening to the proposals of the Spanish governor; and that they even had now a favourable opportunity for obtaining a knowledge of the amount of his force, and for discovering his designs. For this purpose, therefore, he thought it advisable that they should send an intelligent person, under pretence of congratulating the new governor on his arrival, and thanking him for his offer of amicable terms of peace, who might at the same time gain information of whatever he should consider important to regulate their future conduct. Caupolican and most of the older officers adopted this judicious proposal, and the important commission was confided to Millalauco, a person who possessed every requisite for the business confided to his charge.