A territorial dispute over the Chaco Boreal, the conflict between Paraguay and Bolivia followed land losses suffered by the two countries in previous conflicts. In the war between Bolivia and Chile, Bolivia lost her Pacific seacoast, and began to settle the Chaco Boreal because of its navigable outlet to the Atlantic Ocean. Paraguay desired the Chaco because of land lost during a war with the Triple Alliance (Brazil, Argentina, and Uruguay). Paraguay looked to the Chaco as a means of national reconstruction and as a source of economic growth.

The conflict began in the summer of 1928 with the capturing of Bolivian militia by Paraguayan cavalry on August 22nd. The clashes continued throughout the summer and fall, culminating in the Paraguayan capture of Fort Vanguardia on December 6, 1928. Paraguay appealed to the League of Nations, but the approach was rejected by Bolivia and the League yielded to regional mediation. An offer by the Pan-American Confederation to mediate and investigate the conflict was accepted by both parties.

Nearly a year later, on September 12, 1929, Paraguay and Bolivia signed a pact to settle the conflict diplomatically. In April of the next year, Paraguay and Bolivia agreed to exchange the captured forts. On May 1, 1930 both countries resumed diplomatic relations, and on July 23, 1930, the captured forts were exchanged. However, no final peace agreement was signed.