William Tunstall was a wealthy 24-year old English cattleman, banker and merchant who had employed Bonney as a cattle guard. Alexander McSween, a lawyer, John Chisum, a cattleman with huge herds in the area and Tunstall led a faction of roughnecks against another powerful faction in the county that was led by two Irishmen, J.J. Dolan and John Riley. These two men owned a large general store called The House in the county's seat, Lincoln, which was the focal point for a virtual monopoly of the county's trade. The proprietors of The House also had close ties to influential territorial officials in Santa Fe, New Mexico and also with local law enforcement.
In the fall of 1877, shortly after Bonney was hired by Tunstall, violence broke out. The House proprietors Dolan and Riley obtained a court order to seize some of Tunstall's horses as payment for an outstanding debt. When Tunstall refused to surrender the horses the Lincoln County sheriff, William Brady, formed a posse led by deputy William Morton to seize the horses. After protesting the presence of the posse on his land, Tunstall was shot in the head by Morton and Bonney vowed revenge.
Instead of acting out his revenge Bonney was jailed briefly on unrelated charges and had his rifle confiscated by Sheriff Brady. After he was released Bonney joined a posse led by Dick Brewer called the Regulators whose aim was to hunt for Tunstall's killer William Morton. The Regulators found Morton somewhere in the countryside near the Rio Peņasco. Morton surrendered after a five mile running gunfight on the condition that Morton and his fellow deputy sheriff, Frank Baker, would be returned alive to Lincoln. On February 18, 1878, the third day of the journey back to Lincoln, Bonney and another Regulator killed the prisoners along with one of their fellow Regulators that apparently tried to stop them. This marked what many historians regard as the start of the war.
Three weeks later Bonney and several other Regulators holed up in Tunstall's store while Sheriff Brady was searching for the killers of his deputies. They ambushed the sheriff and his men on April 1, 1878, killing Sheriff Brady and mortally wounding one of his deputies. Bonney then broke cover and took back his rifle from the now dead Sheriff Brady. Bonney now shifted his allegiance to his former employer's ally the lawyer McSween. However, a new sheriff allied with The House faction, George Peppin, laid siege to McSween's adobe home in the center of Lincoln while Bonney, McSween and several comrades were inside. Bonney and several others were able to flee the area but McSween was gunned down while trying to escape. This ended the Lincoln County War but tensions were still high between the remnants of the two factions.