Just before the start of the First World War Sturdee became Chief of War Staff at the Admiralty. In November 1914 the Royal Navy suffered a serious defeat at the Battle of Coronel. In response Sturdee was sent to the South Atlantic to seek out the German squadron, commanded by Graf Maximilian von Spee, which had caused the damage at Coronel. On 8 December 1914, while coaling at Stanley, Sturdee encountered von Spee and the subsequent action became known as the Battle of the Falkland Islands. Von Spee, finding that he was engaged with a superior force, was forced to flee. In the course of the pursuit Sturdee's forces sank almost the entire German squadron. Only one light cruiser escaped but she was hunted down in March 1915.