Burgoyne wanted to attack again the next day, but his troops were exhausted. Word came that Henry Clinton was going to operate along the Hudson with 3,000 men. Burgoyne hoped the Americans would respond to this threat by falling back. Burgoyne stayed in place for three weeks, waiting for relief. Clinton did in fact launch a brilliant diversionary attack, capturing Forts Clinton and Montgomery in the Hudson Highlands, forty miles from New York City. But he lacked the resources to go any farther and returned to his base. Gates did not budge and continued to collect troops.

Burgoyne clung to the hope that Clinton's offensive would ease his situation. He still talked of advancing to Albany. In the meantime, he had to face the fact that his subsistence was running low. The army was put on half rations. At a council of war on October 4, his chief subordinates, Baron von Riedesel and Brigadier General Simon Fraser, argued for a retreat. Burgoyne could not bring himself to do this.

On October 7, he led 2,100 men forward in what he called a reconnaissance in force. Gates was ready. Morgan's and other units assailed the British from the front and both flanks. Burgoyne fell back to his lines. Benedict Arnold, who had quarreled with Gates and had no official command, rode into the fight and led the Americans in an assault that carried part of Burgoyne's fortifications. Arnold was wounded, but he had compelled the British to retreat. The Battle of Bemis Heights was devastating to Burgoyne, who lost 700 men. Simon Fraser was mortally wounded and Lieutenant Colonel Breymann killed. What was left of his force could not hope to resume the offensive. The Americans suffered 150 killed and wounded in the battle.

Burgoyne began a painful two-day retreat in a beating rainstorm. On October 9, he took up a position on the heights of Saratoga. It soon became obvious that the army would not move any farther. General Stark blocked the road back to Ticonderoga. Gates brought his army up and his troops swarmed around Burgoyne's position. The British camp became a scene of horror. American rifle and cannon fire was unrelenting. Bodies could not be buried, and the stench of death became unbearable. Wolves crept through the camp, preying on the carcasses of men and horses.

Burgoyne negotiated a convention with Gates, who wanted a quick end to the campaign. On October 17, Burgoyne's army lay down its arms. It was supposed to be transported to Britain on condition that the soldiers never serve in America again. Congress disapproved of Gates's leniency. British infractions of the convention were discovered, and Burgoyne's troops became prisoners of war.