The toquiate of Guanoalca was more remarkable for the exploits of a heroine named Janequeo than by his own. This famous woman was wife of Guepotan, a valiant officer who had long defended the fortified post of Liben near Villarica. After the loss of that important place he retired to the Andes, where he used every effort to stimulate the Puelches inhabiting that mountainous region to rise in defence of the country against the Spanish invaders. Being desirous of having his wife along with him, he descended into the plains in search of her, but was surprised by a party of Spaniards, and preferring to be cut in pieces rather than yield himself a prisoner, he was slain in the unequal combat. Janequeo, inflamed by an ardent desire to revenge the death of her husband, put herself at the head of an army of Puelches in 1590, assisted by Guechiuntereo her brother, with which she made inroads into the Spanish settlements, killing all of that nation who fell into her hands. Reinforced by a regiment of veteran soldiers which had been sent him from Peru, the governor Don Alonza Sotomayor, marched against the heroine; but, by constantly occupying the high grounds, attacking sometimes the van, sometimes the rear of the Spaniards, and harassing them in every possible way, she at last obliged the governor to retire, after having lost much time and a considerable number of men to no purpose. As the governor was of opinion that rigorous measures were best calculated to quell the pride of the Araucanians, he ordered all the prisoners taken in this incursion to be hung before his retreat. On this occasion, one of these men requested to be hanged on a higher tree than the rest, that the sacrifice he had made of himself for his country might be the more conspicuous, and inspire his surviving countrymen with the more ardent determination to defend their liberties.

Having thus foiled all the endeavours of a general who had gained high reputation in the wars of Italy, Germany, and Flanders, Janequeo proceeded to attack the recently constructed fortress of Puchanqui, not far from which she defeated and slew the commandant, Aranda, who had advanced to meet her with a part of the garrison. Not being able to gain possession of this fort, she retired at the commencement of the rainy season to the mountains near Villarica, where she fortified herself in a place surrounded by precipices, from whence she continually infested the environs of that city in such a manner that no one dared to venture beyond the walls. Moved by the distresses of the citizens, the governor sent his brother Don Luis to their aid, with the greater part of two reinforcements which he had recently received from Peru, under the command of Castillejo and Penalosa. The intrepid Janequeo awaited him in her fortified post, which she deemed secure, and repelled for a long time the various assaults of the Spaniards with great presence of mind. At length, her soldiers being dispersed by the fire of the artillery, she had to seek for safety in flight. Her brother was made prisoner, and obtained his life on condition of promising to keep his sister quiet, and to secure the friendship of his vassals and adherents to the Spaniards. But, while proposing this measure in a national council, he was killed by the ulmen Catipiuque, who abhorred every species of reconciliation with the enemy.

The old toqui, Guanoalca, died about the close of 1590, and a young and enterprising warrior, named Quintuguenu, was elected in his stead in the year following. Being ambitious of acquiring military glory, the new toqui assaulted and took the fort of Mariguenu by assault, and established himself on the top of that famous mountain with two thousand men, hoping to render himself as celebrated there as Lautaro had been formerly, by gaining an important victory over the Spaniards. Not dismayed by the misfortunes which had befallen his countrymen in that ill-omened place, the governor put himself at the head of a thousand Spaniards and a large auxiliary force of Indians, and marched without delay for Mariguenu, determined upon dislodging the Araucanians or of besieging them in their post. Having disposed his troops in order, and given the necessary directions, he began at daybreak to ascend the difficult and steep defile, leading the advanced guard in person, directly before which was a forlorn hope of twenty half-pay officers much experienced in similar warfare. He had scarcely got half way up the mountain when he was attacked with the utmost fury by Quintuguenu; but animating his troops by his voice and example, he sustained for more than an hour the utmost efforts of the enemy, and gained the top of the defile by persevering bravery. On reaching the level summit of the mountain, the Araucanians were forced to take refuge within their entrenchments, which they did however in excellent order. The Araucanians, exhorting each other to conquer or die for their country, defended their camp with incredible valour against the utmost efforts of the Spaniards till mid-day; when, after a most obstinate resistance, Don Carlos Irrazabel forced the lines on the left with his company, while at the same time the quarter-master and Rodolphus Lisperger, a valiant German officer, penetrated with their companies on the front and the right of the encampment. Though surrounded on every side, Quintuguenu maintained his troops in good order, earnestly exhorting them not to dishonour themselves by suffering an ignominious defeat in a place which had so often been the theatre of victory to their nation, and by his efforts and bravery long kept the fate of the battle in suspense. While he flew from rank to rank, animating his men and constantly making head against the enemy, he fell pierced with three mortal wounds given by the governor, who had taken aim at him. His last words were an enthusiastic exclamation in favour of liberty. On the death of the toqui, part of the Araucanian troops allowed themselves to be cut in pieces, and the rest sought their safety in flight. Almost all the auxiliaries on the side of the Spaniards fell in this successful battle, but only twenty of the Spaniards were slain, among whom was a Portuguese knight of the order of Christ, who was killed at the commencement of the action.

Highly gratified with being the first who had defeated the Araucanians on the formidable heights of Mariguenu, the governor conducted his victorious army to the sea-shore, where he was saluted by repeated discharges of cannon from the fleet of Peru, then scouring the coast in search of the English squadron, and which had witnessed the victory. These were answered by the army with repeated vollies of musquetry, and the customary demonstrations of joy on so glorious an occasion. Availing himself of the opportunity afforded by the presence of the fleet, the governor sent the quarter-master-general into Peru to solicit the greatest possible reinforcement of troops without delay, to enable him to prosecute the war to advantage in the ensuing campaign. In the mean time, he abandoned the ancient scite of the fort of Arauco, and rebuilt it in a more convenient situation on the sea-shore. Colocolo, son of the celebrated ulmen of that name, but of a very different disposition from that of his father, was lord of that district, and being indignant at seeing his country occupied by the Spaniards endeavoured to drive them off; but being defeated and made prisoner, he solicited for his life, which he obtained on condition of persuading his subjects to return from the mountains and to submit to the authority of the Spaniards. On being urged by his wife Millayene, to fulfil the promise made by their chief, they replied that he ought to endure his misfortunes with the firmness that became his rank and lineage; that they were willing to encounter every danger under his command, and according to his example, or to revenge the outrages he might be subjected to, but could never consent to betray their country by submitting to obey its bitterest enemies. Irritated by this patriotic resolution of his subjects, Colocolo devoted himself in future to the service of the Spaniards, and even served them as a guide in the pursuit of his own people among the fastnesses in which they had taken refuge.

In the year 1592 there happened to be a Spanish prisoner among the Araucanians, who by his ingratiating manners had acquired the confidence and esteem of the principal people of that high-spirited nation. Either by secret instructions from the governor, or from gratitude for the kind treatment he had received while prisoner, this man exerted himself to effectuate a treaty of peace between the nations, and had at one time a fair prospect of bringing it about. But the preliminaries which he proposed as the ground work of a reconciliation did not prove satisfactory to either party, and all his endeavours were abortive. The governor, being irritated at the rejection of his proposals, marched into the province of Tucapel which he laid waste on every side with fire and sword. As Paillaeco, who had been elected toqui in place of Quintuguenu, did not think his force sufficient to oppose the enemy in the open field, he endeavoured to draw them into an ambush. With this view, he placed an hundred horsemen at the entrance of a wood, within which he had concealed the remainder of his troops, giving orders to the horse to counterfeit flight on the coming up of the enemy to draw them within reach of the ambushment. This scheme seemed at first to promise success, but in the end turned against its contriver. The Araucanians took to flight and were pursued by the Spaniards, who soon discovered that it was only a stratagem, and turned back accordingly as if struck with a panic, in hopes of decoying the enemy to quit the wood and attack them in the open field. Not aware of this repetition of their own trick, the Araucanians fell into the snare they had laid for their enemies; and being surrounded on every side, were mostly cut in pieces together with their commander, after selling their lives at a dear rate, a small remnant taking refuge in the marshes from the pursuit of the victors.

These repeated victories certainly cost much blood to the Spaniards, as the governor after this last action withdrew to St Jago to await the reinforcements he expected from Peru, and to raise as many recruits as possible in the northern provinces of Chili. As the reinforcements did not appear to him sufficient for continuing the war with a reasonable prospect of ultimate success, he even went into Peru in person to solicit more effectual succours, leaving the charge of the civil government daring his absence to the licentiate Pedro Viscarra, and the command of the army to the quarter-master. On his arrival at Lima, Sotomayor met with a successor who had been appointed to the government of Chili, by the court of Spain. This was Don Martin Loyola, nephew of St Ignatius, the celebrated founder of the order of the Jesuits, who had acquired the favour of the viceroy of Peru by taking prisoner Tupac Amuru the last Inca of Peru. In requital for this service, he was not only gratified by being appointed to the government of Chili, but was rewarded by obtaining in marriage the princess or coya Donna Clara Beatrix, the only daughter and sole heiress of the former Inca Sayri Tupac. Loyola arrived at Valparaiso, in 1593, with a respectable body of troops, and immediately proceeded to St Jago, where he was received with every demonstration of joy by the citizens; but during his administration the Spaniards experienced the severest disaster that had ever happened to them in Chili.

After the defeat and death of Paillaeco, the Araucanians elected Paillamachu to the supreme command, who was hereditary toqui or prince of the second Uthulmapu. This military dictator was already much advanced in years, yet a man of wonderful activity and resources, and was so fortunate in his enterprises that he far surpassed all his predecessors in military glory, and had the singular felicity of restoring his country to its ancient independence by the entire expulsion of the Spaniards from its territories. Immediately on his elevation to the supreme dignity of toqui, he appointed two officers of great valour and merit, Pelantaru and Millacalquin to the important employments of vice-toqui, deviating from the usual custom of the nation, which allowed only of one lieutenant-general. And, as the military force of the confederacy had been greatly diminished by the late unfortunate incidents in the war, he followed the example of Antiguenu, a former toqui, by withdrawing into the almost inaccessible marshes of Lumaco, where he used his utmost efforts to collect and discipline an army for the execution of the extensive plans he had formed for the entire liberation of his country.

After having regulated the police of the capital and the civil government of the kingdom of Chili, Loyola proceeded to the city of Conception, where he established his headquarters in order to be at hand for conducting the operations of the war. The toqui of the Araucanians, on hearing of his arrival, sent an intelligent and sagacious officer named Antipillan to compliment him, but charged at the same time to obtain information of his character and designs. In frequent conferences with this person, the new governor endeavoured to impress him with an idea of the vast power and immense resources of the Spanish monarchy, against which it was impossible as he said for the Araucanians to contend successfully, and insinuated therefore the necessity of their submitting to an accommodation. Pretending to be convinced by the reasoning of Loyola, the ambassador acknowledged the prodigious power of the Spanish monarchy in comparison with the Araucanian state; which, notwithstanding the vast disproportion, had hitherto been able to resist every effort of the Spaniards. He acknowledged even the propriety of his nation entering into negotiations for peace, but alleged that the Spaniards affixed wrong ideas to that word; as, under the semblance of peace, they sought to subject the Araucanians to their authority, which they would never agree to while one of them remained alive. And finally, that the only peace to which they would consent, must consist of an entire cessation of hostilities, a complete restoration of all the lands which were occupied by the Spaniards within the Araucanian territory, and an explicit renunciation of every pretence to controul or interfere with their independent rights.

As Loyola was of a generous disposition, he could not avoid admiring the noble and enlightened sentiments of the barbarian ambassador, and dismissed him with the strongest demonstrations of esteem. Yet so far was he from any idea of abandoning the posts already established in the Araucanian territory, that he crossed the Biobio in 1594, and founded a new city at a short distance from that river, giving it the name of Coya in honour of his wife a Peruvian princess. This place was intended to protect the rich gold mines of Kilacoyan, and to serve as a place of retreat for the inhabitants of Angol in case of need; and in order to render it more secure, he constructed two castles in its immediate neighbourhood, named Jesus and Chivecura, on either shore of the Biobio. Solicitous to destroy this new settlement, which he considered as a disgrace to his administration, Paillamachu sent in 1595, one of his officers named Loncothequa, with orders to destroy the fort of Jesus. After twice penetrating within the works, and even burning a part of the interior buildings of this place, Loncothequa lost his life without being able to accomplish the enterprise.

In 1596, the toqui made frequent incursions into all the Spanish districts, both within and adjoining the Araucanian territory, on purpose to subsist his troops and to inure them to a military life. The Spanish army attempted in vain to prevent or pursue these predatory detachments, as the wary Paillamachu took the utmost care to avoid any encounter, determined to reserve his force for some favourable occasion. On purpose to restrain these incursions Loyola erected two additional forts in the neighbourhood of the encampment or head-quarters of the toqui, one on the scite of the old fort of Puren, and the other on the borders of the marshes of Lumaco, which he garrisoned with the greater part of a reinforcement of troops which he had just received from Peru. He sent the remainder of these in 1597 to the province of Cujo, where they founded a new city, called San Luis de Loyola, which still subsists in a miserable condition, though placed in a very advantageous situation.