Following the disaster at Coronel on 1 November, a powerful taskforce under Vice Admiral Sir Doveton Sturdee, including the battlecruisers HMS Invincible and HMS Inflexible, was dispatched to hunt down the Graf von Spee's Asiatic Squadron.

Sturdee's ships were re-coaling at Port Stanley in the Falkland Islands when von Spee's squadron came into sight, planning a raid on the British facilities there. However, von Spee hesitated, probably upon seeing the distinctive tripod masts of the battlecruisers in the harbour. Furthermore, the elderly battleship HMS Canopus, which had been deliberately run aground by her captain to act as a harbour defence ship, opened fire, scoring a direct hit on Gneisenau with her first salvo. The hit did little damage since the shell was an inert practice round - Canopus had been about to start a gunnery training drill. But the hit may have contributed to von Spee's fatal decision to turn away and run.

Sturdee's ships gave chase, and the advantages in speed and firepower enjoyed by his battlecruisers soon told: this was precisely the type of action for which the much maligned battlecruisers were designed - the destruction of enemy raiders. Scharnhorst and Gneisenau were destroyed by Invincible and Inflexible, von Spee going down with his flagship, whilst Sturdee's armoured and light cruisers dispatched the rest of the German squadron, only the light cruiser Dresden escaping. She was eventually tracked down at Juan Fernandez on 14 March 1915, whereupon she scuttled herself.