After the Serapis and the Richard had been well lashed together, there began a new phase of the battle, which had already lasted about an hour. There were only three guns left in action on the Richard, nine-pounders on the quarter-deck, and the ship was badly leaking. The eighteen-pounders of the enemy had riddled the gun-deck of the American ship, rendering her, below-decks, entirely untenable. The real fight from this time to the end was consequently above-decks. Jones abandoned any attempt at great gun fire, except by the three small pieces on the quarter-deck, drew practically his entire remaining crew from below to the upper deck and the tops, and devoted his attention to sweeping the decks of the enemy by the musketry of his French marines from the quarter and poop decks, and of the American sailors in the tops. The crew of the Serapis, on the other hand, were forced mainly to take refuge in their well-protected lower decks, from which they continued to fire their great guns into the already riddled hull and lower decks of the Richard.

After the juncture of the vessels Captain Pearson made several desperate attempts to cut the anchor loose, hoping in that way to become free again of the Richard, in which case he knew that the battle was his. Jones, of course, was equally determined to defend the anchor fastenings. He personally directed the fire of his French marines against the British in their repeated attempts to sever the two ships, to such good purpose that not a single British sailor reached the coveted goal. So determined was Jones on this important point that he took loaded muskets from the hands of his French marines and shot down several of the British with his own hand.

The captain of the French marines, who rendered at this important stage of the action such good service, had been wounded early in the battle, and the succeeding lieutenants had also been either killed or disabled. The marines had been greatly diminished in numbers and were much disheartened at the time Jones took personal command of them. Nathaniel Fanning vividly narrates the manner in which Jones handled these Frenchmen: "I could distinctly hear, amid the crashing of the musketry, the great voice of the commodore, cheering the French marines in their own tongue, uttering such imprecations upon the enemy as I never before or since heard in French or any other language, exhorting them to take good aim, pointing out objects for their fire, and frequently giving them direct example by taking their loaded muskets from their hands into his and firing himself. In fact, toward the very last, he had about him a group of half a dozen marines who did nothing but load their firelocks and hand them to the commodore, who fired them from his own shoulder, standing on the quarter-deck rail by the main topmast backstay."

A French sailor, Pierre Gerard, who has left a memoir of the battle, tells how his countrymen responded to Jones's presence: "Commodore Jones sprang among the shaking marines on the quarter-deck like a tiger among calves. They responded instantly to him. In an instant they were filled with courage! The indomitable spirit, the unconquerable courage of the commodore penetrated every soul, and every one who saw his example or heard his voice became as much a hero as himself!"

Both vessels were at this time, and later, on fire in various places. Captain Pearson says in his official report that the Serapis was on fire no less than ten or twelve times. Half the men on both ships had been killed or disabled. The leak in the Richard's hold grew steadily worse, and the mainmast of the Serapis was about to go by the board. The Alliance again appeared and, paying no heed to Jones's signal to lay the Serapis alongside, raked both vessels for a few minutes indiscriminately, went serenely on her way, and brought her inglorious and inexplicable part in the action to a close. Captain Pearson had, for a moment, towards the end of the action, a ray of hope. A gunner on the Richard, thinking the ship was actually sinking, called for quarter, but Jones stunned him with the butt end of a pistol, and replied to Pearson, who had again hailed to know if the Richard had struck, to quote his own report, "in the most determined negative." About the same time, the master at arms, also believing the ship to be sinking, opened the hatches and released nearly two hundred British prisoners, taken in the various prizes of the cruise.

Nothing, apparently, could be more desperate than the situation of Paul Jones then. His guns useless, his ship sinking and on fire, half of his crew dead or disabled, the Alliance firing into him, a portion of his crew panic-stricken, and two hundred British prisoners at large on the ship! But with Lieutenant Richard Dale to help him, he boldly ordered the prisoners to man the pumps, and continued the fight with undiminished energy. Soon after occurred the event which practically decided the battle in his favor. He had given orders to drop hand grenades from the tops of the Richard down through the enemy's main hatch. It was by this means that the Serapis had been so often set on fire. Now at an opportune moment, a hand grenade fell among a pile of cartridges strung out on the deck of the Serapis and caused a terrible explosion, killing many men. This seemed to reduce materially the fighting appetite of the British, and soon after a party of seamen from the Richard, with the dashing John Mayrant at their head, boarded the Serapis, and met with little resistance. Captain Pearson thereupon struck his colors, and the victory which marked the zenith of Jones's career, and upon which all else in his life merely served as commentary, was scored. Captain Pearson, in his court-martial, which was a formality in the British navy in case of defeat, explained Jones's victory in a nutshell: "It was clearly apparent," he said, "that the American ship was dominated by a commanding will of the most unalterable resolution," and again, "the extraordinary and unheard-of desperate stubbornness of my adversary had so depressed the spirits of my people that, when more than two hundred had been slain or disabled out of 317 all told, I could not urge the remnant to further resistance."

The capture of the British ship, which took place about half-past ten at night, came none too soon, for the old Bonhomme Richard was sinking. The flames were extinguished by combined efforts of crew and prisoners by ten o'clock the next morning, but with seven feet of water, constantly increasing in the hold, it was then apparent that it was impossible to keep the old vessel afloat, and men, prisoners, and powder were transferred to the Serapis. On the morning of the 25th Jones obtained, "with inexpressible grief," as he said, "the last glimpse of the Bonhomme Richard," as she went down.

The desperate battle fought in the bright moonlight was witnessed by many persons in Scarborough and on Flamborough Head, and they spread the alarming tidings throughout England. In a letter to Robert Morris, written soon after, Jones said, of the cruise in general: "We alarmed their coasts prodigiously from Cape Clear round to Hull; and had I not been concerned with sons of interest I could have done much."

With his two new prizes (for the Countess of Scarborough had after a short action struck to the greatly superior Pallas) Jones set off for the Texel, with a most dilapidated crew and fleet. The Alliance, well called a "Comet" by the editor of the Janette-Taylor collection of Jones's papers, disappeared again after the battle. Landais, whose conduct was described by Jones as being that of "either a fool, a madman, or a villain," was afterwards dismissed the service, but not until he had cut up other extraordinary pranks. He now went off with his swift and uninjured frigate to the Texel, leaving Jones, laden down with prisoners and wounded, unassisted. Of the Richard's crew of 323, 67 men had been killed, leaving 106 wounded and 150 others to be accommodated on the injured Serapis. Then there were 211 English prisoners on the Richard at the beginning of the action; and of the 332 (including 8 sick men and 7 non-combatants) men composing the crew of the Serapis, there were 245 left to be cared for—134 wounded, 87 having been killed. There were, consequently, only 150 well men to look after 562 wounded and prisoners. Some of the latter were afterwards transferred to the Pallas, but altogether it was an unwieldy fleet which slowly sailed for the Texel, at which neutral port Jones arrived October 3, none too soon, for as he entered the roads, an English squadron, consisting of a sixty-four ship of the line and three heavy frigates, which had been looking for him, hove in sight.