The battle of Palo Duro Canyon was the major battle of the Red River War, which ended in the confinement of southern Plains Indians (Comanches, Kiowas, Kiowa Apaches, Cheyennes, and Arapahos) to the reservations in the Indian Territory. By late September 1874 the warring Indians had camped in the protection of Palo Duro Canyon, where a Kiowa shaman, Maman-ti, promised them they would be safe. Col. Ranald S. Mackenzie led his Fourth United States Cavalry from the south in a plan to trap the Indians in their refuge. His soldiers pursued several small Comanche bands into Tule Canyon and defeated them. Mackenzie reached the edge of Palo Duro Canyon on September 28, 1874, guided by the Tonkawa chief Johnson, and ordered his scouts to locate a path to the canyon floor, which they quickly did. Although Mackenzie's attack on the large Indian encampment at sunrise on September 28 was designed to be a surprise, the Indians were warned by the Comanche leader Red Warbonnet, who discovered the soldiers and fired a warning shot. He was then killed by the Tonkawas. The leadership of the several Indian bands fell to the Cheyenne chief Iron Shirt, Comanche leader Poor Buffalo, and the Kiowa chief Lone Wolf. Because their camps were scattered over a large area on the canyon floor, the Indians were unable to assemble a united defense; the soldiers fought a series of skirmishes against a number of war parties who lacked the individual strength to defeat them.
Mackenzie's soldiers and scouts initially destroyed Red Warbonnet's village, an act that spread panic among the other Indian villages in the canyon. The Tonkawa scouts, accompanied by their women, were responsible for most of the destruction of Comanche property and also gathered an enormous amount of loot. Many Indians abandoned their belongings and even their horses and fled the canyon for the open plains. Some of the warriors fought back, sniping at the soldiers, but their resistance was insufficient, and by nightfall Mackenzie's soldiers and Tonkawa scouts had captured the Indians' villages and most of their possessions. The Indian losses at Palo Duro Canyon amounted to three warriors dead. One white was killed. Mackenzie's troops also captured more than 1,400 Indian ponies. Of these, forty were given to Johnson and another 300 to the other scouts. The remaining ponies were shot by the soldiers. Most of the Indians' supplies, including their entire winter food supply, was also destroyed. Though the loss of life on both sides was remarkably small, the battle of Palo Duro Canyon is significant because it represented the southern Plains Indians' last effort at military resistance against the encroaching whites.