By 1866, the western expansion of American settlers had reached Montana and Wyoming, the traditional hunting grounds of the Lakota Sioux, Northern Cheyenne and Arapaho Indians. To protect these lands that had been promised to them by the US government, "For as long as the rain shall fall and the grass shall grow". The Indians retaliated by attacking the wagon trains as they followed the Bozeman Trail westwards, this trail branched northwest from the Oregon Trail and passed through Wyoming, crossing the Powder and Tongue rivers and the Big Horn Mountains, ending in the goldfields of Montana.
In June of that year, the inexperienced Colonel Henry B Carrington, commanding the 18th Infantry Regiment and with a force of 700 soldiers and 300 civilians was sent from Fort Laramie to protect the emigrants and establish three forts along the trail, including his headquarters at Fort Phil Kearny.
While the fort was under construction, Carrington was plagued by a number of Indian attacks killing over a dozen soldiers and construction workers. These were hit and run raids by parties of 20 or more mounted Indians and some of Carrington's more aggressive junior officers urged him to take the offensive against the raiders. On November 3rd, a cavalry company of 63 men arrived to reinforce the fort, led by Lieutenant Horatio Bingham. Accompanying the cavalry were infantry Captains Fetterman and Powell. Both Bingham and Fetterman were civil war veterans and had no experience of fighting Indians, but from his first day at the fort Fetterman was critical of Carrington's caution and contemptuous of the Indian foe. He believed that a disciplined force of US soldiers could beat any number of Indians and is reported to have promised, "Give me 80 men and I can ride through the whole Sioux nation".
On the 22nd November, Fetterman accompanied an escort of soldiers guarding a small wagon train gathering firewood and construction timber for Fort Kearny when they were attacked by a band of Indians who tried to entice the soldiers to pursue them into the woods where an ambush had been set. Wisely, the commander of the wagons, a Lieutenant Bisbee, wisely took up a defensive position and safely returned to the fort.
Three days later, Carrington was ordered by General Cooke at Fort Laramie to take the offensive against the Indians in response "To their murderous and insulting attacks". On the 6th of December, Carrington's pickets atop a nearby hill reported that a wood train was under attack by Indians some four miles west of the fort. Carrington ordered Fetterman to take a company of cavalry and a squad of mounted infantry to relieve the wood train, while he himself would take a group northwards and cut off the Indian's line of retreat. During this movement, Lietenants Bingham and Grummond became separated from Carrington who suddenly found his force surrounded by 100 Indians. Fortunately, Fetterman arrived a few minutes later and drove the Indians off.
Grummond appeared a short time later, pursued by a band of Indians, but managed to reach safety with the main force. Lieutenant Bingham and a sergeant were killed however and four troopers wounded. Fetterman was sobered by the clash and the poor discipline of the soldiers, noting that. "This Indian war has become a hand to hand fight requiring the utmost caution". Carrington's mountain man guide, Jim Bridger put it plainer when he noted that,"Soldiers dont know nuthin about fighting Indians".
Carrington intensified the training of his soldiers and doubled the number guarding the wood trains. On December 9th, the Indians again attacked a wood train and Carrington sent Captain Powell, his most cautious officer, with a cavalry unit to rescue the train. He was given specific orders not to pursue the Indians beyond Lodge Trail Ridge, some two miles north of the fort. Powell returned safely having accomplished his mission. Carrington insisted on caution until reinforcements and additional horses arrived from Fort Laramie, much to the disgust of Fetterman.
The Indians, led by Red Cloud, encouraged by their success, planned to make one large military operation against the fort before the winter snows forced them to break up their large camp on the Tongue River and disperse. Their decoy trick had worked in the past and this time they would use a much larger force. The warriors, over 1,000 in number, laid an ambush on the Bozeman Trail at Lodge Trail Ridge, out of sight but only four miles from the fort.
On the morning of 21st December 1866, Carrington sent a wagon train to "the pinery" a forested area, to collect wood for fires and construction and sent 90 soldiers to guard it. A little after 10am, the pickets on the nearby hill signalled that the train was under attack. Carrington ordered a relief force, comprising of 49 infantrymen and 27 cavalry, under the command of Captain Powell to leave immediately, but Fetterman, by claiming seniority as a brevet lieutenant colonel, insisted that he should be given command instead and the timid Carrington allowed him to take over, leaving Powell behind. With the force went Lieutenant Grummond who had had such a lucky escape earlier, Captain Brown and two civilians, James Wheatly and Isaac Fisher, bringing the relief force up to 81 officers and men.
Carrington's orders were clear; "Under no circumstances" were the relief force, "To pursue over the ridge, that is, Lodge Trail Ridge".
Lieutenant's Grunnond's wife later wrote in her memoirs of the incident that Fetterman was given this order twice, the second time by Carrington on the sentry walk after ordering the troops to halt as they left the fort. She noted that, "These orders were heard by everyone present".
On leaving the fort, Fetterman led his force northwards rather than directly towards the pinery, probably in an attempt to attack the Indians from the rear. Shortly after their departure, the fort received a signal that the wagon train was no longer under attack and this was followed by a group of some 50 Indians who appeared and began firing at the fort. The soldiers in the fort replied with cannon and the Indians rode off. Shortly afterwards they heard the sound of heavy firing to the north. Carrington sent out a force of 75 infantrymen under Captain Ten Eyck to search for Fetterman. Ten Eyck advanced slowly to the crest of Lodge Trail Ridge and saw a very large force of Indians in the Peno Creek valley who approached and taunted the soldiers. Meanwhile, the nervous Carrington had sent another patrol of some 42 infantrymen to join Ten Eyck and the Indians slowly dispersed and disappeared.