While these events were going on in the south, the governor had to oppose the Pehuenches who had invaded the new settlement of Chilian, and whom he defeated and constrained to retire into their mountains. He then marched into Araucania at the head of seven hundred Spaniards and a great number of auxiliaries, resolved to pursue the cruel and rigorous system of warfare which had formerly been adopted by Don Garcia, in preference to the humane procedure of his immediate predecessors. The province of Encol was the first to experience the effects of this severity, as he laid it entirely waste with fire and sword, and either hanged his prisoners, or sent them away with their hands cut off to intimidate their countrymen. The adjoining provinces of Puren, Ilicura, and Tucapel would have experienced a similar fate, if the inhabitants had not ensured their personal safety by flight, after setting their houses and crops on fire, and destroying every thing they could not carry off. Only three prisoners were taken in these provinces, who were impaled. Notwithstanding these severities, many mestees and mulatoes joined the Araucanians, and even some Spaniards, among who was Juan Sanchez, who acquired great reputation among them.

Impelled either by his natural rash valour, or by despair on finding that he had fallen in the estimation of the Araucanians by his want of success, Paynenancu gave battle to the whole Spanish army on the confines of the province of Arauco with only eight hundred men; yet such was the resolute valour with which they fought that the Spaniards were unable to break their firm array, till after a hard contested battle of several hours, in which they lost a considerable number of men. Almost the whole of the Araucanian troops engaged in this unequal contest were slain; but Paynenancu was made prisoner and immediately executed. The victorious governor encamped with his army on the banks of the Carampangui river, and caused the fortress of Arauco to be rebuilt, of which he gave the command to Garcia Ramon the quarter-master.

The Araucanian valour, which had been repressed by the imprudent conduct of Paynenancu, was revived in 1585, by the elevation of Cayancura to the dignity of toqui, an ulmen of the province or district of Mariguenu. Immediately on his election, he dispatched an hundred and fifty messengers to every corner of the country, with the symbolical arrows to summon the martial youth of Araucania to the national army. Having by these means assembled a respectable force, the new toqui determined upon making an attack at midnight on the Spanish camp, which was still on the banks of the Carampangui, and of the exact situation of which he had procured information by means of a spy. For this purpose, he formed his army in three divisions, of which he gave the command to three valiant officers, Lonconobal, Antulevu, and Tarochina. The divisions proceeded by three several roads which led to the camp, and coming upon it by surprise, cut the auxiliaries to pieces who were the first to oppose their progress. Fortunately for the Spaniards, the moon rose about the middle of the assualt, and enabled them, after a short period of confusion, and the loss of several men, to form themselves in good order, and to make head against the assailants, who at length began to give way after suffering severely from the fire of the Spanish musquetry. Just at this critical time, the governor charged the Araucanians and forced them to give way, after both sides had suffered considerable loss. Cayancura, who had halted with a body of reserve at the entrance of the Spanish camp for the purpose of supporting the attack, on finding his troops retiring exhausted and dispirited, drew off the whole to some distance where he permitted them to take rest and refreshment during the remainder of the night, and returned at day-break next morning to the attack. The Spanish army marched out to meet them in the open field, and a most obstinate and bloody battle ensued. After a brave contest, the Araucanians were overpowered by the artillery and cavalry of the Spaniards, and constrained to quit the field with great loss, though the Spaniards paid dear for their victory; insomuch that, immediately after the action, the governor raised his camp and retired to the frontiers, where he built two forts named Trinidad and Spiritu Santo on the northern shore of the Biobio. He also sent orders to the major-general to raise as many recruits as possible throughout the kingdom of Chili, which officer brought him accordingly a reinforcement of two thousand87 horse and a considerable number of infantry.

Undismayed by his recent losses, the Araucanian general determined to take advantage of the governors retreat to lay siege to the fort of Arauco; and in order to secure the success of this enterprise, he endeavoured to occupy the Spanish arms in other quarters. For this purpose, he ordered one of his officers named Guepotan to make incursions on the territory of Villarica from the fortified post of Liben, where he had supported himself for several years. To Cadiguala, another officer who afterwards became toqui, he gave it in charge to harass the district of Angol; appointed Tarochina to guard the passage of the Biobio, and sent Melilauca and Catipillan to keep the garrison of Imperial in check. These officers had several encounters with the Spaniards attended with various success. Guepotan lost the fortified post of Liben, which was taken by the governors brother. Tarochina made himself master of a great number of boats on the Biobio, which were conveying supplies of men and warlike stores to the recently erected forts on that river.

In the year 1586, the toqui Cayancura began the siege of Arauco, which he surrounded with strong lines, so as not only to intercept all succours, but to prevent the retreat of the garrison88. Perceiving from these preparations, that they must finally be compelled to surrender or perish by famine, the garrison thought it better to die at once with arms in their hands than to be reduced to such extremity. They attacked therefore the works of the enemy with such vigour, that after an obstinate and sanguinary combat of four hours, they succeeded in forcing them, and put the Araucanians to flight. Cayancura was so exceedingly mortified by this defeat, that he retired to his ulmenate, leaving the command of the army to his son, Nangoniel, a young man of great hopes and much beloved by the nation. This young commander immediately collected a new army, in which were an hundred and fifty horse, which from this time forwards became a regular part of the Araucanian military force. With these troops he returned to invest the fortress of Arauco, and guarded all its environs so closely that the garrison were unable to procure a supply of provisions, and were at length compelled to evacuate it, probably on capitulation. Encouraged by this good fortune, Nangoniel proceeded towards the Biobio, intending to attack the fort of Trinidad, which protected the passage of supplies in that direction from Spanish Chili to the forts on the south of that river. But while on his march, he was encountered by a detachment of Spanish troops commanded by Francisco Hernandez, by whom he was defeated. In this action he lost an arm and received several other dangerous wounds. Being obliged by this misfortune to take refuge on a neighbouring mountain, where he was drawn into an ambush by the sergeant-major89 of the Spanish army, he and fifty of his soldiers were slain, after defending themselves valiantly for a long time. On the same day, an officer named Cadeguala, who had obtained great reputation in the Arancanian army for his courage and military skill, was proclaimed toqui by the officers.