By the 31 October 1914, the German East Asiatic Squadron, consisting of the cruisers Scharnhorst and Gneisenau and light cruisers Dresden, Nürnberg and Leipzig was approaching the coast of Chile just north of Coronel. German intelligence had reported a British light cruiser had recently refuelled at Coronel, and another report had identified two cruisers and a pre-dreadnought battleship had entered the Pacific via Cape Horn. The Nürnberg and a couple of merchant vessels had been dispatched to Valparaiso to obtain coal and supplies, while the other cruisers headed towards Coronel.
The British light cruiser Glasgow had been joined by the cruisers Good Hope and Monmouth off the coast of Coronel on the 1 November. The armed merchant liner Otranto also joined the three cruisers to make a sweep northwards in search of German ships. At the time, the battleship Canopus, which rear-admiral Craddock had told to follow his cruisers at its best speed, was some 250 miles to the south. The weather was fine but strong winds made the sea very rough.
At 4.40 pm Otranto spotted smoke on the horizon to the north east and Glasgow went to investigate. The smoke was soon identified as the German squadron and the four British ships, still several miles apart from each other in a search formation, turned south-west then south to join up. The German ships turned towards the British ships but did not attempt to engage them expecting Canopus to be near by. The British squadron took up battle formation behind Good Hope, and Craddock ordered the ships to close the range on the German cruisers. However, the presence of Otranto limited the squadron's speed to 15 knots and the German squadron easily avoided contact until the setting sun gave the German gunners the advantage of shooting at ships silhouetted against the sky while their own ships were in darkness. At 7pm the two squadrons finally engaged under circumstances overwhelmingly in favour of the German ships.
The accurate German gunnery quickly destroyed the forward 9.2 inch gun on Good Hope and during the following 30 minutes the German cruisers severely damaged both Good Hope and Monmouth with little damage in return. The rough seas made the light cruisers toss about too much for accurate gunnery and they did not play a significant part in the action. In the gathering darkness, Otranto pulled out of position and escaped westwards. At 7.30pm Good Hope tied to close the range to bring its 6 inch guns within range, and the heavily listing Monmouth turned north in an attempt to use its starboard side guns. With the battle clearly lost Glasgow turned west and escaped in the dark to warn Canopus.
Both the British and German ships lost sight of Good Hope and she is believed to have sunk with all hands at 7.57 pm. Monmouth sailed north and lost contact with the German cruisers, but then ran into Nürnberg which had been sailing south to rejoin its squadron. Nürnberg sank the crippled Monmouth, with the loss of all hands.
While von Spee had confirmation of Monmouth's sinking, he thought Good Hope had escaped and would head for Valparaiso for repairs. He therefore turned the squadron north and it was not until 3 November that news reached him of Good Hope's sinking. By that time Glasgow and Canopus were on their way south towards the Falkland Islands and plans were being made in London to send better armed ships to engage von Spee's squadron.