With most British troops concentrated in the north, the south saw little fighting in the early years of the war. The early action in the south took on the character of a civil war between Patriots and those still loyal to the royal administration. These struggles presaged the bitter hostility that raged between “Whigs” and “Tories” during the course of the conflict, and which would re-emerge with great virulence in the south when the British army eventually arrived.

The royal governor of Virginia, John Murray, the Earl of Dunmore, was an energetic and combative man. In 1774, he had launched and won a war against the Shawnee Indians to solidify Virginian land claims in the west. In the days after Lexington and Concord, Dunmore tried to resist the Patriots in Virginia but was forced to seek the shelter of a British warship at Yorktown in June. Dunmore collected a small fleet and established himself at Norfolk. He began rallying a force of loyalists. In November, Dunmore issued a proclamation that anathematized the Patriots as “traitors” and hence liable to “forfeiture of life, confiscation of lands, &C., &C.” He then declared that any indentured servants or slaves who took up arms against the rebels would be freed. Dunmore created a unit of loyalists that he called the Queen's Own Loyal Virginians and a regiment of escaped slaves that he named Lord Dunmore's Ethiopian Regiment.

Dunmore's proclamation offering freedom to African American slaves outraged Virginia's planters, for whom it raised the terrifying prospect of a servile war. His gambit was denounced as a “diabolical scheme” and backfired politically by solidifying support for the Patriot cause. The Virginians raised a force of 900 men to eject Dunmore from his base. A detachment of Dunmore's men was defeated at Great Bridge on December 11. Dunmore evacuated Norfolk but returned on January 1 and burned most of the town. He coasted along Virginia for a few months. Raids to secure food and supplies were largely unsuccessful. Disease and hunger ravaged the men on his ships. Dunmore finally dispersed his fleet to the shelter of Florida and the West Indies. He betrayed the African Americans who had joined him. Most were sold back into slavery. Dunmore himself returned home a hero to his King and was rewarded by being made the governor of the Bahamas.

A large number of Scottish Highlanders, many of them veterans of the British army, had settled in North Carolina. They were staunchly loyal to George III. The royal governor of North Carolina, Josiah Martin, from his refuge aboard a British warship, saw the Highlanders as natural allies. In January 1776, Martin issued a proclamation denouncing the rebels and inviting the Highlanders to rally around “His Majesty's Royal standard.” In February, 1,500 Highlanders gathered with the intention of marching to the coast to make contact with the British.

The North Carolina authorities organized a force of 1,100 men to confront the Highlanders. After some maneuvering, the Patriots established a blocking position at Moore's Creek Bridge. The Highlanders, many wielding traditional Scottish broadswords, decided to force their way through with a frontal attack. They charged with great dash, but the fire from the defensive works was too much. The Patriots counterattacked and drove the Highlanders from the field. The next day 850 surrendered. For the time being, the loyalists in the Carolinas had been subdued.