Around about this time, Hugh O'Neill, the Earl of Tir Eoghain decided that the increased English control of the rest of Ireland was a threat to his Celtic heritage, Brehon laws and Catholic faith. Concerned by the strength of the English, he decided to pre-empt an English attack and attack them first. The English were totally unprepared and found it hard to respond. In successive offensives, they were repelled from Ulster. Eventually the English decided to cut their losses and dug-in around the edges of Ulster. They built a series of forts around the province's southern limits, and this forced the Irish to attack the English forts rather than attack on even terms. This finally gave the English the advantage, but despite this new English tactic, it wasn't until 24 December 1601 at the battle of Kinsale that O'Neill's army was defeated. O'Neill retreated into Tir Eoghain [Tyrone] but did not surrender. Rather than invading Ulster to finish off O'Neill, the English strengthened their forts and started launching commando-raids into Ulster to destroy crops. They hoped to starve O'Neill into submission or into launching an unprepared attack. O'Neill did attack again, but was finally defeated by Lord Mountjoy at Omye [Omagh] in 1602. (Even today a townland near Omagh is called Mountjoy.) In 1603, the O'Neill and the English signed the Treaty of Mellifont which permitted O'Neill to keep his land while adopting English law and shedding his Irish title.

However, the English felt that the Treaty of Mellifont was not enough to keep control of Ulster. They knew that Catholic Spain could supply the Ulstermen with arms to launch an uprising against them. So they decided to plant Ulster with Protestant settlers. However, the lesson of previous plantations had been learned. In the Laois/Offaly plantations and particularly in Munster, the settlers had been badly affected by attacking Irish. So this time the settlers were to live in specially built fortified towns known as Plantation Towns. In 1609 the English mapped out 4,000,000 acres of land and started gaving it out in 1610. Counties Down, Monaghan and Antrim were planted privately. Counties Derry and Armagh were planted with English. Counties Tyrone and Donegal were planted with Scots. Counties Fermanagh and Cavan were planted with both Scots and English.

The vast majority of the settlers were Scottish, as it turned out, and they brought with them a new form of Christianity, Presbyterianism, which was different from both Roman Catholicism and the Church of England, although it is classified as Protestant. They also brought new farming methods and a Puritan lifestyle. This made north-east Ireland culturally very different from the rest of the island. Many native Ulstermen attacked the settlers and burned crops. Some were shipped to the continent. However many native Irish stayed and became employees of the settlers, and the Ulster Plantation became the most successful plantation to date.