Potts chose Bogeanumu, a dominating feature on the southern side of the valley from Efogi and Kagi. A mission hut was perched on a bald ridge running down into wartime Efogi. It became known as Mission Ridge. The feature was destined to witness the biggest battle of the Kokoda Campaign. Pitt's third battalion, the 2/27th was released from Port Moresby where it had been held in reserve pending the outcome of the battle for Milne Bay. Potts placed this fresh battalion on the ridge with the Mission hut and positioned his depleted 2/14th and 2/16th battalions to the rear of the major feature known as Brigade Hill.
General Horii consolidated his 6000 combat troops at Kagi in preparation for the decisive battle for the Owen Stanley Range. On the night of 6 September they began their procession down the mountain below Kagi - 6000 lighted fuse wire, candle and torches gave the waiting Australians an indication of the odds against them. Unbeknown to the Australians, a group of natives led a cut-off force up the valley beneath Bogeanumu.
Virtually the first shot of the battle almost killed Brigadier Potts as he walked towards his HQ tent. The Japanese cut-off force emerged and launched an immediate attack on Brigade HQ. Potts and his Brigade staff – officers, clerks and cooks (later regaled as the toothless and ruthless) were engaged in a bitter battle of survival.
Forward of Mission Ridge, the Japanese used fire and movement in repeated frontal attacks against the 2/27th Battalion. They probed the flanks from impossible positions and attacked the 2/14th and 2/16th Battalions. Every element of the 21st Brigade was now engaged in the battle. Potts had conducted a poor appreciation of his defensive position and the Japanese were soon able to exploit the vulnerable areas. The Australian battalions were unable to provide mutual support to each other as each fought separate battles for survival.
Captains' Claude Nye and Brett (Lefty) Langridge of the 2/14th and 2/16th Battalions were ordered to fight through the Japanese force that infiltrated between the battalions and Brigade HQ. Both were aged 24 and were already veterans of the Middle East campaigns. They knew the price they would have to pay to accomplish their mission. Of the 78 men they led against the Japanese infiltration, only six got through. Nye, Langridge and Corporal Charlie McCallum DCM were killed along with 70 of the men they led.
The Australians were forced into another fighting withdrawal. The 2/27th Battalion withdrew along the high ground to the south-east whilst the other two battalions withdrew down the main trail to Menai. The 2/27th Battalion were isolated in the jungle and listed as the lost battalion as they struggled with their wounded and without food over the next 21 days. Potts consolidated his two remaining battalions which had been reduced to 307 men at Menai in the hope the 2/27th would link up with them. They soon came under heavy fire from the Japanese mountain guns on the high ground above Efogi and began a fighting withdrawal on 10th of September.
There was much panic back in Australia which caused a crisis of command as tensions rose between General Macarthur, Prime Minister Curtin and General Blamey. Potts was relieved of his command and replaced by Brigadier Porter who had orders to stabilise the situation. The battle-weary remnants of the 21st Brigade withdrew to Ioribaiwa Ridge to secure the position and allow 730 fresh troops from the 25th Brigade under Brigadier Eather to conduct a passage of lines and begin the offensive against the Japanese.