Fonseca was succeeded by the Vice-President, according to the regulations of the Constitution.  This was Floriano Peixoto, who at first gave promise of a liberal and progressive government.  Very soon, however, it became evident that the abuses of authority encouraged by him were becoming even more violent than those of the previous regime, and that the military despotism was even more accentuated.  Any Governor who did not bend without question to the will of the President was instantly deposed, and in this way the Governors of Matto Grosso, Ceara, and Amazones were deprived of their posts.  Every official, in fact, who did not show himself disposed to serve the new autocrat with a blind obedience was deprived of whatever office he had held.  The discontent grew rapidly, while numerous Ministers resigned, and once again the flames of revolt broke out in Rio Grande do Sul.

On September 6, 1893, Admiral Custodio de Mello, after various abortive attempts, anchored again in front of the capital, and prepared his cruiser Aquidaban for action.  Peixoto, however, determined to defend his position, and prepared himself to face the dozen or more warships which comprised the fleet of the insurgents.  On September 12 the first serious fight took place, the town being bombarded heavily by the fleet, to which the guns of the forts responded on behalf of the Government.

The struggle continued in a desultory fashion, and a daily interchange of shots was wont to take place between the naval and military forces.  This situation continued for the remainder of the year 1893, and, as time went on, the position of the Government became rather more strengthened, especially when it was reported that some war vessels ordered by Peixoto in Europe were on their way to Brazil.

In the meanwhile, however, the position in the south became far more favourable to the insurgents.  The revolutionary forces under Saraiva began a march to the north, when his movement was aided by a portion of the fleet, under Admiral Donello, which had sailed to the south in order to co-operate.  Curitiba was captured, and the march up from the south bade fair to be triumphant.  This was to a certain extent neutralized by the interference of the United States warships in the harbour of Rio on behalf of some merchant vessels of their nationality threatened by the revolutionary squadron.  By this means the rebels lost prestige, and the situation of Admiral da Gama, who had been left in command of the rebel fleet, became serious.

On March 7 the vessels ordered by Peixoto from Europe arrived off Rio, and da Gama, hearing no news from Mello, took refuge, with his officers and men, on some Portuguese men-of-war.  The authorities of Rio demanded that these crews should be given up, but the Portuguese refused to surrender them, and sailed away from the harbour with the insurgents on board, a proceeding which caused a diplomatic rupture between Portugal and Brazil.