Meanwhile the Potidaeans and the Peloponnesians with Aristeus were encamped on the side looking towards Olynthus on the isthmus, in expectation of the Athenians, and had established their market outside the city. The allies had chosen Aristeus general of all the infantry; while the command of the cavalry was given to Perdiccas, who had at once left the alliance of the Athenians and gone back to that of the Potidaeans, having deputed Iolaus as his general: The plan of Aristeus was to keep his own force on the isthmus, and await the attack of the Athenians; leaving the Chalcidians and the allies outside the isthmus, and the two hundred cavalry from Perdiccas in Olynthus to act upon the Athenian rear, on the occasion of their advancing against him; and thus to place the enemy between two fires. While Callias the Athenian general and his colleagues dispatched the Macedonian horse and a few of the allies to Olynthus, to prevent any movement being made from that quarter, the Athenians themselves broke up their camp and marched against Potidaea. After they had arrived at the isthmus, and saw the enemy preparing for battle, they formed against him, and soon afterwards engaged. The wing of Aristeus, with the Corinthians and other picked troops round him, routed the wing opposed to it, and followed for a considerable distance in pursuit. But the rest of the army of the Potidaeans and of the Peloponnesians was defeated by the Athenians, and took refuge within the fortifications. Returning from the pursuit, Aristeus perceived the defeat of the rest of the army. Being at a loss which of the two risks to choose, whether to go to Olynthus or to Potidaea, he at last determined to draw his men into as small a space as possible, and force his way with a run into Potidaea. Not without difficulty, through a storm of missiles, he passed along by the breakwater through the sea, and brought off most of his men safe, though a few were lost. Meanwhile the auxiliaries of the Potidaeans from Olynthus, which is about seven miles off and in sight of Potidaea, when the battle began and the signals were raised, advanced a little way to render assistance; and the Macedonian horse formed against them to prevent it. But on victory speedily declaring for the Athenians and the signals being taken down, they retired back within the wall; and the Macedonians returned to the Athenians.
Thus there were no cavalry present on either side. After the battle the Athenians set up a trophy, and gave back their dead to the Potidaeans under truce. The Potidaeans and their allies had close upon three hundred killed; the Athenians a hundred and fifty of their own citizens, and Callias their general.
The wall on the side of the isthmus had now works at once raised against it, and manned by the Athenians. That on the side of Pallene had no works raised against it. They did not think themselves strong enough at once to keep a garrison in the isthmus and to cross over to Pallene and raise works there; they were afraid that the Potidaeans and their allies might take advantage of their division to attack them. Meanwhile the Athenians at home learning that there were no works at Pallene, some time afterwards sent off sixteen hundred heavy infantry of their own citizens under the command of Phormio, son of Asopius. Arrived at Pallene, he fixed his headquarters at Aphytis, and led his army against Potidaea by short marches, ravaging the country as he advanced. No one venturing to meet him in the field, he raised works against the wall on the side of Pallene. So at length Potidaea was strongly invested on either side, and from the sea by the ships co-operating in the blockade. Aristeus, seeing its investment complete, and having no hope of its salvation, except in the event of some movement from the Peloponnese, or of some other improbable contingency, advised all except five hundred to watch for a wind and sail out of the place, in order that their provisions might last the longer. He was willing to be himself one of those who remained. Unable to persuade them, and desirous of acting on the next alternative, and of having things outside in the best posture possible, he eluded the guardships of the Athenians and sailed out.
Remaining among the Chalcidians, he continued to carry on the war;in particular he laid an ambuscade near the city of the Sermylians, and cut off many of them; he also communicated with Peloponnese, and tried to contrive some method by which help might be brought.
Meanwhile, after the completion of the investment of Potidaea, Phormio next employed his sixteen hundred men in ravaging Chalcidice and Bottica: some of the towns also were taken by him.