Grant's orders concerned only Fort Henry, but he quickly saw his opportunity for opening two rivers rather than one to Union forces. He immediately pressed his soldiers for the short march to Donelson. Unfortunately, Donelson was not as vulnerable as Fort Henry, and it now had a reinforced garrison. The Confederate commander of the whole Kentucky line, Albert Sydney Johnston — considered by many to be the best general the South had — faced a grim choice. Losing Fort Donelson would be disastrous for the Southern cause, but sending additional troops to the fort would remove them from elsewhere. Johnston decided to send some reinforcements to the fort; it would have 16,000 men to Grant's 15,000, though Grant was looking for reinforcements.

Fort Donelson was really a formal fort plus a fortified area that embraced the small town of Dover. The Confederates had made lines of defenses outside both, and they had heavy guns to battle any gunboats coming at them. Shortly, Foote tested these riverside defenses in the hope that he could batter the fort into submission just as he had Fort Henry, without the help of the army. But here the Southern gunners had high ground, and they repulsed Foote's gunboats with significant loss. If the fort were to be taken, Grant's ring of besieging soldiers would have to do the work.

They did, but with the help of a tremendous Confederate error. Three generals were in charge of the defense of Donelson: John Floyd, who had served as secretary of war to President Buchanan but had little military training; Gideon Pillow; and Simon Bolivar Buckner, a West Pointer and a friend of Grant's. The three Confederates realized that Grant's strength meant he would capture the fort, and they determined that their best course was to break out of Grant's besieging ring and retreat toward Nashville.

On February 15, the Southerners opened the road that would allow them a retreat toward Nashville. But rather than hasten along it, by order of General Pillow they turned back to their old quarters to fetch their belongings. Grant, somewhat surprised by the Confederate breakout attempt, was hard pressed to close the gap. But he also realized that if the Southerners were trying to break out to the south, they were probably weak along the northern trenches. Grant ordered an attack there, and Union men captured some of the fortifications in this sector.

Unconditional Surrender

Floyd, Pillow, and Buckner realized they were hemmed in for good. Floyd passed command to Pillow and escaped; Pillow passed command to Buckner and escaped. Nathan Bedford Forrest broke out with some of his horsemen, but Buckner was left to perform the odious job of surrender. He sent a letter through the lines asking his old friend Grant for terms. Grant, thinking Floyd or Pillow in command, wrote one of the most famous letters in military history and certainly one of the shortest. Buckner, irritated and distressed, nevertheless surrendered unconditionally. When the press learned the details of the siege they dubbed U. S. Grant “Unconditional Surrender” Grant.

The North could finally celebrate its first important victory against a substantial Confederate land force with a great deal at stake. Grant became a hero. Johnston's line was now broken in the middle. He had to abandon the stronghold of Columbus, Kentucky, on the Mississippi River, and he had to retreat from central Kentucky. He also could not hold Nashville because its location on the Columbia River left it vulnerable to attack by Union gunboats. The greater part of Tennessee now lay open to the North, which also gained the psychological victory of capturing the capital of a seceded state.