The siege of Badajoz was next undertaken. On the 27th of January the Third Dragoon Guards marched for Freiz and Leomil, near the Douro, and arrived there on the 7th of February. On the 18th they were again in motion, and proceeding by Mysando de Corvo, and Thomar, crossed the Tagus at Abrantes, and the Guadiana, near Olivenza, and arrived at Rebeira on the 19th of March. Seven days afterwards they were again on the march, forming part of a force under Lieutenant-General Sir Thomas Graham, destined to surprise a body of French troops at Llecena: when the enemy, after some resistance, retired to Azuaga, from whence they were driven on the 29th of March.

The regiment formed part of the army of observation under Lieutenant-General Sir Thomas Graham, and accompanied the movements of this force until after the capture of Badajoz, when Lord Wellington marched with the main body of the army towards Castile. The Third Dragoon Guards were stationed at Villa Franca and Rebeira, being formed in brigade with the First Royal Dragoons, under the orders of Major-General Slade, and were attached to a separate corps of the army, commanded by Lieutenant-General Sir Rowland Hill: subsequently the regiment advanced to Llera.

On the 11th of June the enemy's General, L'Allemand, advanced upon Llera, with the 17th and 29th regiments of French dragoons. Major-General Slade moved forward with the Third Dragoon Guards and Royal Dragoons, when the two regiments made a brilliant charge, and defeated and pursued the enemy nearly three leagues. On arriving within a short distance of Maguilla the two British regiments had an opportunity of making a second charge, which they executed in gallant style, and having broken the enemy's first line, slew a number of men, and took many others, with one of General L'Allemand's aides-de-camp, prisoners. At length the enemy brought forward a strong support; and the two regiments being eager in the pursuit, each vying with the other which should most distinguish itself, were attacked by the enemy, forced to relinquish a number of prisoners, and to retire upon Llera. Major-General Slade concluded his despatch with observing, 'Nothing could exceed the gallantry displayed by the officers and men on this occasion. Colonel Sir Granby Calcraft and Lieutenant-Colonel Clifton, commanding the two regiments, particularly distinguished themselves, as well as all the officers present. I beg particularly to report the conduct of Brigade-Major Radcliffe, to whom I feel particularly indebted for his assistance on this occasion.' The Third Dragoon Guards had thirteen men killed; and Lieutenant Homewood, sixty-seven men, and eighty-five horses were taken by the enemy.

On the following day a detachment from the Third Dragoon Guards and Royal Dragoons, consisting of about twenty men of each regiment, commanded by Lieutenant Strenuitz (aide-de-camp to Sir William Erskine) formed an ambush to intercept a strong foraging party of the enemy's cavalry. The party of the Third Dragoon Guards was destined to commence the attack, and was placed, for that purpose, under the command of troop-serjeant-major M'Clelland (who had formerly distinguished himself); and the Royals formed the reserve. The detachment came in contact with the French at a village near Belango; the Third Dragoon Guards charged with all the spirit and fire of Britons. The fury of the onset threw the enemy into confusion; they at once gave way and fled in all directions, leaving several officers and men, and a great number of horses, in the hands of the victors. The success of this gallant affair enabled the regiment to retrieve, by exchange with the enemy, the greatest part of the loss sustained on the preceding day.

The French having considerable reinforcements at hand, Sir Rowland Hill retired by Santa Martha to Albuhera, where the Third Dragoon Guards were joined by a remount from England, consisting of two serjeants, forty-two private men, and sixty horses.

On the 1st of July the regiment had another opportunity of signalizing itself in conflict. A strong body of French cavalry having succeeded in driving in the Spanish out-posts, was threatening the safety of the British camp at Albuhera, which was covered by the Third Dragoon Guards, when a picquet of about twenty men of the regiment, under the command of Captain E. R. Story, who perceived the extreme danger of the camp and the necessity of a check, stood the charge of the French squadrons; and having ultimately received a reinforcement of a squadron of the regiment, under Captain Watts, repulsed the attack, charged in turn, and finally compelled the enemy to retreat, recovering, at the same time, the prisoners which the French had taken in the first onset. On this occasion Lieutenant Ellis, one serjeant, one trumpeter, and two private men of the picquet, were killed; and Captain Watts, whose squadron reinforced the picquet, was wounded. This important and valuable service, performed at so critical a moment, occasioned an order for every man of the Third Dragoon Guards to be supplied with an extra ration of rum; and the following brigade order was published on the same day.

'Major-General Slade is most happy in the opportunity which the Third Dragoon Guards have afforded him of thanking them for the gallantry and steadiness with which they repulsed an attack made by the enemy's cavalry this afternoon; particularly the picquet under the command of Captain E. R. Story, and the supporting squadron, commanded by Captain Watts. He requests those officers, with the officers and men under their command, will be pleased to accept his grateful acknowledgments.

'The Major-General particularly regrets the loss of Lieutenant Ellis, who nobly fell at the head of his men: he has also to lament Captain Watts being wounded, but he hopes not dangerously so, and that the regiment will not be deprived of his services long.'

The camp at Albuhera broke up on the following day, and the troops advanced upon the enemy, who retired upon Cordova. The Third Dragoon Guards proceeded by Los Santos to Llerena; and occupied Fuente del Mastre on the 24th of July, on which day they were suddenly called upon to make a flank movement with the view of gaining the rear of two regiments of French dragoons and one of chasseurs, who had driven in the Portuguese picquet, and were advancing upon Villa Franca. The regiment passed through Los Santos, and, advancing at a quick pace, soon reached Hinojosa; but the French had made a precipitate retreat, and had quitted the town a short period before the Dragoon Guards arrived.

After the main army had gained a signal victory at Salamanca (for which Lord Wellington was advanced to the dignity of Marquis), the French hastily retired before the troops commanded by Lieutenant-General Hill, who took up a position on the Tagus. The Third Dragoon Guards marched by Usagre, Balangur, and Villa, crossed the Tagus at Almaraz on the 19th of September, and occupied Belois: from whence they moved on the 26th, re-crossed the Tagus at Talavera de la Reyna, and arrived at Tombleque, in La Mancha, on the 8th of October; and, on the 21st, occupied some villages on the right bank of the Tagus.