The Board of Trade held General Amherst responsible for the uprising. As a consequence, he was recalled to London in August 1763. Major General Thomas Gage replaced him. In 1764, Gage sent two expeditions into the west to crush the rebellion, rescue British prisoners, and arrest the Native Americans responsible for the war. According to historian Fred Anderson, Gage's campaign, which had been designed by Amherst, prolonged the war for more than a year because it focused on punishing the Native Americans rather than ending the war. Gage's one significant departure from Amherst's plan was to allow William Johnson to conduct a peace treaty at Niagara, giving those Native Americans who were ready to "bury the hatchet" a chance to do so.
From July to August 1764, Johnson negotiated a treaty at Fort Niagara. About 2,000 Native Americans were present, primarily Iroquois. Although most Iroquois had stayed out of the war, Senecas from the Genesee River valley had taken up arms against the British, and Johnson worked to bring them back into the Covenant Chain alliance. As restitution for the Devil's Hole ambush, the Senecas were compelled to cede the strategically important Niagara portage to the British. Johnson even convinced the Iroquois to send a war party against the Ohio Native Americans. This Iroquois expedition captured a number of Delawares and destroyed abandoned Delaware and Shawnee towns in the Susquehanna Valley, but otherwise the Iroquois did not contribute to the war effort as much as Johnson had desired.
After they had secured the area around Fort Niagara, the British launched two military expeditions into the west. The first expedition, led by Colonel John Bradstreet, was to travel by boat across Lake Erie and reinforce Detroit. Bradstreet was to subdue the Native Americans around Detroit before marching south into the Ohio Country. The second expedition, commanded by Colonel Bouquet, was to march west from Fort Pitt and form a second front in the Ohio Country.
Bradstreet set out from Fort Schlosser in early August 1764 with about 1,200 soldiers and a large contingent of Native allies enlisted by Sir William Johnson. Bradstreet felt that he did not have enough troops to subdue enemy Native Americans by force. When strong winds on Lake Erie forced him to stop at Presque Isle on August 12, he decided to negotiate a treaty with a delegation of Ohio Native Americans led by Guyasuta instead. Bradstreet exceeded his authority by conducting a peace treaty rather than a simple truce, and by agreeing to halt Bouquet's expedition, which had not yet left Fort Pitt. Gage, Johnson, and Bouquet were outraged when they learned what Bradstreet had done. Gage rejected the treaty, believing that Bradstreet had been convinced to abandoning his offensive in the Ohio Country. Gage may have been correct: the Ohio Native Americans did not return prisoners as promised in a second meeting with Bradstreet in September, and some Shawnees were trying to enlist French aid in order to continue the war.
Bradstreet continued westward. He did not know yet that his unauthorized diplomacy was angering his superiors. He reached Fort Detroit on August 26, where he negotiated another treaty. In an attempt to discredit Pontiac, who was not present, Bradstreet chopped up a peace belt the Ottawa leader had sent to the meeting. According to historian Richard White, "such an act, roughly equivalent to a European ambassador's urinating on a proposed treaty, had shocked and offended the gathered Indians." Bradstreet also claimed that the Native Americans had accepted British sovereignty as a result of his negotiations, but Johnson believed that this had not been fully explained to the Native Americans and that further councils would be needed. Although Bradstreet had successfully reinforced and reoccupied British forts in the region, his diplomacy proved to be controversial and inconclusive.
Colonel Bouquet was delayed in Pennsylvania while mustering the militia. He finally set out from Fort Pitt on October 3, 1764, with 1,150 men. He marched to the Muskingum River in the Ohio Country, within striking distance of a number of native villages. Now that treaties had been negotiated at Fort Niagara and Fort Detroit, the Ohio Native Americans were isolated and, with some exceptions, ready to make peace. In a council which began on October 17, Bouquet demanded that the Ohio Native Americans return all captives, including those not yet returned from the French and Indian War. Guyasuta and other leaders reluctantly handed over more than 200 captives, many of whom had been adopted into Native families. Because not all of the captives were present, the Native Americans were compelled to surrender hostages as a guarantee that the other captives would be returned. The Ohio Native Americans agreed to attend a more formal peace conference with William Johnson, which was finalized in July 1765.
The military conflict essentially ended with the 1764 expeditions. Some Native Americans still called for resistance in the Illinois Country, where British troops had yet to take possession of Fort de Chartres from the French. A Shawnee war chief named Charlot Kaské emerged as the most strident anti-British leader in the region, temporarily surpassing Pontiac in influence. Kaské traveled as far south as New Orleans in an effort to enlist French aid against the British.
In 1765, the British decided that the occupation of the Illinois Country could only be accomplished by diplomatic means. As Gage commented to one of his officers, he was determined to have "none our enemy" among the Indian peoples, and that included Pontiac, to whom he now sent a wampum belt suggesting peace talks. Pontiac had by now become less militant after hearing of Bouquet's truce with the Ohio country Native Americans. Johnson's deputy, George Croghan, travelled to the Illinois country in the summer of 1765. Even thogh he was injured along the way in an attack by Kickapoos and Mascoutens, he managed to meet and negotiate with Pontiac. While Charlot Kaské wanted to burn Croghan at the stake, Pontiac urged moderation and agreed to travel to New York, where he made a formal treaty with William Johnson at Fort Ontario on July 25, 1766. It was hardly a surrender: no lands were ceded, no prisoners returned, and no hostages were taken. Rather than accept British sovereignty, Kaské left British territory by crossing the Mississippi River with other French and Native refugees.
The total loss of life resulting from Pontiac's War is unknown. About 400 British soldiers were killed in action and perhaps 50 were captured and tortured to death. George Croghan estimated that 2,000 settlers had been killed or captured, a figure sometimes repeated as 2,000 settlers "killed". The violence compelled approximately 4,000 settlers from Pennsylvania and Virginia to flee from their homes. Native American losses went mostly unrecorded.
Pontiac's War has traditionally been portrayed as a defeat for the Native Americans. Scholars now usually view it as a military stalemate: while the Native Americans had failed to drive away the British, the British were unable to conquer the Native Americans. Negotiation and accommodation, rather than success on the battlefield, ultimately brought an end to the war. The Native Americans had in fact won a victory of sorts: They forced the British government to abandon Amherst's policies and instead create a relationship with the Native Americans modeled on the Franco-Native alliance.