Fearful of Japanese expansion in Asia, Russia joined Germany and France to compel Japan to return the Liaotung Peninsula to China. In 1896, Russia signed a treaty of alliance with China against Japan, under which China granted Russia the right to extend the Trans-Siberian Railroad through Manchuria to Vladivostok, a seaport in eastern Russia. Two years later, Russia coerced China into leasing it Port Arthur. During the Boxer Rebellion of 1900, several world powers sent military troops to China. Russian forces occupied Manchuria and refused to leave after the revolt was quashed. At the same time, Japan was increasing its influence in Korea. On February 8, 1904, without declaring war, Japan attacked and laid siege to Port Arthur.

Concerned by Russia's aggressive behavior in East Asia over recent years, President Roosevelt was initially sympathetic to Japan, but hoped the war would result in relative balance, rather than the dominance of one power.  Applying his good offices to help resolve the war was potentially risky to Roosevelt's personal stature, should he fail, but successful mediation would enhance his and the nation's prestige on the world stage.  More importantly, he deemed it important that the conflict be ended on terms consistent with what he judged to be America's national interest in Asia.

Early in the war, Roosevelt headed an international coalition aiming to preserve China's neutrality and territorial integrity by limiting the theater of war.  In March 1904, Japan conquered Korea and by late May had cut off Port Arthur from Russian troops in Manchuria.  Japan continued to score victories over the summer and into the fall.  A Russian counteroffensive in the fall proved ineffective, and President Roosevelt began to worry that Japan might emerge from the war as the principal power in the Far East.  He was also concerned about the Japanese seizure of a Russian warship in Chinese waters and Japanese restrictions on the American press.

On January 2, 1905, the Russian commander at Port Arthur, without consulting his officers, ended the nearly year-long siege by surrendering to the Japanese, even though the Russians had sufficient provisions and ammunition to last three more months.  It was a major defeat for the Russians, and provoked Roosevelt to intensify his mediation efforts.  In February, he met unofficially with a British diplomat, Cecil Spring Rice, to agree on steps to bring the sides to the negotiating table.  Yet, Japan feared that being first to pursue peace would show weakness, while Russia did not want to negotiate while they were losing. 

Several weeks of fighting at Mukden, Manchuria, resulted in heavy casualties--71,000 Japanese and 89,000 Russians--and a Russian retreat in early March 1905.  On April 18, the Japanese let Roosevelt know via the French that it was "not unlikely that the friendly good offices of some Power might be necessary" to end the war.  The Russians, however, tried one last gambit by sailing its Baltic fleet to Japan.  But on May 27-29, 1905, the Japanese destroyed it at the Battle of Tsushima.  Russia was now soundly defeated in the war, and Japan was financially drained.  By June 12, both Russian and Japan had accepted Roosevelt's offer to arrange the peace talks.  The London Morning Press expressed the typical sentiment that "Mr. Roosevelt's success has amazed everybody."

The president then faced the difficult task of facilitating a successful outcome for the peace talks that began in early August 1905 at Portsmouth, New Hampshire.  Roosevelt readily acceded to Japan's authority over Korea, thereby violating an 1882 Korean-American treaty.  He did so believing that a disgruntled Japan might strike against the American territories in Hawaii and the Philippines or American interests in China.  

The two key issues in conflict at the negotiations were whether Russia should pay Japan an indemnity and which nation would control Sakhalin Island.  After resolving minor points, the talks stalled on August 18.  Three days later, President Roosevelt proposed that Sakhalin Island be divided between the two powers.  Although other factors were involved, including Japan dropping its demand for indemnity, the president's intervention was instrumental in resolving the deadlock.  

The talks ended on August 29 and a treaty was signed on September 5, 1905, in which Japan kept Port Arthur and the South Manchurian Railroad, and gained hegemony over Korea, but returned the northern half of Sakhalin Island to Russia. The terms of the treaty, though, led to riots in Tokyo and helped provoke the Russian revolt of 1905 after which Tsar Nicholas signed a constitutional charter.

In 1906, President Theodore Roosevelt was awarded the Nobel Peace Prize for his part in ending the Russo-Japanese War.  He was the first American president to be so honored.