On January 3, Maj. Gen. Thomas J. "Stonewall" Jackson led his Confederate army up the Shenandoah Valley. On the way, he had planned on heading towards Bath. He sent a force towards Bath, led by Brig. Gen. William W. Loring. Loring had the force split in two, with the Valley Army militia on the west side of the Warm Spring Mountain and Loring's main force on the east side of the mountain.
Around dusk, Loring's men ran into some Union picketsoutside of Bath. The Confederates eventually drove them off but did not give chase. While Jackson wanted them to pursue the Federaels, Loring ordered the men to bivouac for the night. The Valley militia was slowed down by felled trees obstructing the roads they were taking. They also bivouaced for the night before reaching Bath.
On January 4, the militia renewed their advance but was stopped by the waiting Federals. Many of the militia panicked and fled the area. Loring's men stopped a half mile outside of town after spotting some Federals atop the mountain. Jackson did not want his men to spend another night outside of the town and ordered Loring to advance into Bath that evening. The Union force retreated from Bath while the Confederates were waiting outside of the town.
Once the town was occupied by the Confederates, a small force was sent to chase the retreating Federals. They never did catch up with the Federals and moved back into town.