By early 1865, Solano López was determinate to take domain of  Paraná River as a first step to control the entire La Plata Basin. If he had success in engaging by surprise the Imperial Fleet on the low waters of the river he would achieve a important victory that would enable further land operations.
Surprise would be essential. In late 1864 the Paraguayan Navy consisted of 17 small vessels of varying sizes. Only two of them , the Anhambay and the Tacuarí were constructed as gunboats. During the 1860s López was hopeful of having new ironclads added to his fleet. He maintained contacts with some European countries to obtain these ships. This project, however, had to be abandoned for financial problems.
The Imperial Fleet, on the other side, lined up 45 vessels, 33 steamers and 12 sailing ships at the outbreak of war. The force had at disposal a total manpower of almost 2,400 officers and men. The main units was the propeller-type Niterói and the side-wheeler Amazonas. The fleet, nevertheless, had a important defect: it was projected for high-seas rather than river operations.
On June 8 , The Paraguayan Fleet was gathered in Assuncíon for departure toward the Fortress of Humaitá. López himself was to go aboard the Tacuarí. The whole capital population was present to witness the departure. At the end of the morning the ships left toward the fortress. As soon as he arrived in Humaitá on the morning of the following day, López immediately began to prepare the attack on the enemy squadron stationed on the nearby of Corrientes. in a widening called Riachuelo, which was given support to the land forces of the Triple Alliance to expel the Paraguayans from Corrientes. He gathered the bulk of the Paraguayan Navy to strike the Brazilian ships by the dawn of June 11. The squadron consisted of eight ships, the flagship Tacuarí, the newly arrived Paraguarí, built in England, the captured Brazilian steamship Marquês de Olinda and the Ygureí, Ybera, Yporá, Jejuí, Salto Oriental and the Pirabebé. Along with the ships, six low-lying flat bottomed barges with one eight inch cannon each , known as chatas, would be towed to meet the enemy. The squadron amounted 36 guns. Commodore Pedro Inácio Meza would command the assault. Besides, the Paraguayan ships would have the support of a battery of cannons under Colonel José Maria Bruguez placed along the shoreline of the river.
Brazil's Squadron anchored near Corrientes lined the Amazonas (flagship) and the ships Jequitinhonha, Belmonte, Parnaíba, Ipiranga, Mearin, Iguatemi, Araguarí and the Beberibé. Total fire power of the squadron amounted to 59 guns. Admiral Francisco Manuel Barroso was in command of the ships.
Meza should run down the Paraná during the day-break of June 11  in order to reach the enemy by dawn. Surprise would compensate the fact that the Paraguayan ships were outgunned. At two o'clock on the morning the fleet left Humaitá. At five o'clock the chatas joined the ships. Notwithstanding, a problem in the engine of the Iberá delayed the plan.
Only at nine o'clock, at broad day light, the ships reached Riachuelo.
After placing the chatas near the shore, Meza conducted his ships directly at the enemy in order to separate the Imperial Squadron in two.
Barroso ships were anchored near the confluence of the Paraná and two narrow channels. The attack, if not a entire surprise, happened when Barroso's  ships were lined towards the shore.
The Ipiranga (right) and the Salto Oriental exchanging fire - Brazilian Navy Archives
Meza squadron passed the enemy ships sending fire onto them .Each of his vessels choose one ship to engage. Soon the Amazonas was under fire of the Tacuarí, while the Ipiranga was exchange fire with the Salto.
In the fray the two squadrons changed position. Meza was below the enemy squadron and cut from his base in Humaitá. Then, the Paraguayan Commander adopted the strategy of attracting the foes to thenarrow channels where they could not maneuver as good as the Paraguayans did.
The Jequitinhonha, Barroso largest ship after the Amazonas, struck on a sand-bar. She became an easy target for the merciless artillery of Bruguez.
The Belmonte was hit several times by the fire of the chatas.
The Parnaíba struck on the shore and drift. Soon she was surrounded by several Paraguayan ships. The Marquês de Olinda boarded the Brazilian ship and a deadly fight took place on  Parnaíba deck. Repeatedly, the Paraguayans tried to take control over the ship. Only with stiff resistance Parnaíba's crew kept the ship. Finally, a final assault was expelled and the ship slipped away from the enemy.
Exchange of fire between Marines aboard the Amazonas and a Paraguayan vessel (probably the Paraguarí) - Brazilian Navy Archives
At this point, things began to change.
Despite the difficulties in maneuvering, the superior fire power of Barroso's ships began to be effectiveness.The Jejuí was sunk by close fire of  Brazilian ships. The Marquês de Olinda had her boilers shot and was out of action. The Paraguarí was rammed by the Amazonas and laid helpless. Meza gave orders to retreat. At 1 P.M the fight was over. Of the eight Paraguayan vessels, only four returned to Humaitá. The others were sunk, captured or laid helpless on a sand-bar (this included the Paraguarí, the Jejuí, the Marquês de Olinda and the Salto Orientall) . Two chatas were sunk and the other four fell into Brazilian hands. Some days later, however, the Paraguayans were succefull in taking the Paraguarí back, sending the ship to Assuncíon for repair.The Paraguayan losses are not entirely known. Probably the Brazilian estimates of 1,000 casualties are exaggerated. Maybe this number lay between 300 and 400 (brazilian sources say it may reach 750).
Meza died some days later in Humaitá from the wounds he received during the battle.
The Imperial Squadron lost one ship, the Jequitinhonha while two others vessels, the Parnaíba and the Belmonte were severed damaged. The Ipiranga was lightly damaged. Barroso had 104 men killed, 123 wounded and 20 missing.
The Paraguayans failed in the attempt of having the entire command of the Paraná River from Assuncíon to Montevidéo. Besides, they could not replace the ships lost. While Brazil was adding new units to the fleet.
Battle of Riachuelo by Victor Meireles- Fine Arts Museum (Brazil).
From Corrientes to Passo de La Patria