General Washington followed his success at Trenton with another on January 3, 1777, when, again crossing the Delaware, he outmarched General Charles Cornwallis, and approaching from the rear defeated three British regiments and three companies of light cavalry at Princeton, New Jersey. Washington then moved his troops northward to winter headquarters near Morristown and began to rebuild his army. The victories at Trenton and Princeton revived patriot hopes. Washington's forces had almost been destroyed but he had kept going and regained most of New Jersey. In spite of superior strength, the British had again failed to defeat the rebels.

While the closing successes of 1776 had inspirited the Americans, it was undeniable that the campaign had gone heavily against them. Having raised a permanent force called the Continental Army, they had awaited further operations of the enemy. Following up the occupation of New York, General William Howe proceeded in 1777 to capture Philadelphia. Complete success again crowned his movements. Taking his army by sea from New York to the head of the Chesapeake, he marched up into Pennsylvania, where General Washington had taken position to watch him, and on September 26 entered the city. The Americans attempted to check the advance of the British at Brandywine River, where an action occurred on the 11th resulting in their defeat; and on October 4, Washington directed a well-planned attack upon the enemy's camp at Germantown on the outskirts of the city, but failed.

Howe's victorious progress in Pennsylvania was neutralized by disasters farther north. Indeed his whole expedition to seize "the enemy's capital" was nothing less that an abandonment of an expedition from the north with which he was expected to co-operate. Sir Henry Clinton, whom he had left at New York, protested against this folly to the last. Lord George Germain in England was only in part to blame. General John Burgoyne marched from Canada in June 1777, with a strong expeditionary force, to occupy Albany, New York, and put himself in touch with Howe who was expected to come up the Hudson River. Driving the Americans under General Arthur St. Clair out of Fort Ticonderoga, and making his way through the deep woods with difficulty, he reached the Hudson at Fort Edward on July 30. General Philip Schuyler (father-in-law of Alexander Hamilton), commanding the Americans in that area, retreated to Stillwater, 30 miles above Albany, barricading the roads and impeding Burgoyne's progress. Unjustified dissatisfaction with his conduct led congress to replace Schuyler by General Horatio Gates.

On August 13, Burgoyne dispatched a force to Bennington, Vermont, under the German colonel, Friedrich Baum, to capture stores and assert authority. On the 16th Baum was attacked by General John Stark with the militia from the surrounding country, and was overwhelmed. Colonel Breymann, marching to his relief, was also routed. The misfortune cost the British 1,000 men. Equally unfortunate was the fate of an expedition sent under Colonel Barry St. Leger to co-operate with Burgoyne by the way of the Mohawk Valley. On August 16 he was met at Oriskany by General Nicholas Herkimer and forced to retreat. Despite these disasters Burgoyne pushed south to Stillwater, where he was defeated by Gates's improvised army of continentals and militia in two battles on September 10 (Freeman's Farm) and on October 7 (Bemis's Height). (Battles of Saratoga). On the 17th he was forced to surrender. This disaster was followed by the alliance between America and France in 1778, and later by the addition of Spain and Holland to England's enemies -- events of far-reaching importance.

Washington's army of about 10,000 soldiers spent the winter camped at Valley Forge, about 20 miles northwest of Philadelphia. Many of the troops lacked shoes and other clothing. They also suffered from a severe shortage of food. By spring 1778, nearly a fourth of the soldiers had died of malnutrition, exposure to the cold, and such diseases as smallpox and typhoid fever. Many soldiers deserted because of the horrid conditions.