A meeting between human and Draconian representatives had been planned, but both races' ships were damaged in a neutron storm. The Draconians arrived in a battle cruiser which had been stripped of its missiles, but their communications equipment was damaged. The human ship, commanded by John Williams, was "helpless", and Williams believed that the approaching Draconian ship was planning to attack. He decided to attack the Draconian vessel, and destroyed it. Thus began the war. It lasted for three days and over 500 million humans and Draconians were killed. (PROSE: Doctor Who and the Space War)
Although factions on both sides of the conflict opposed negotiations, eventually a treaty was signed establishing a frontier between the two empires. The treaty also forbade subversion and espionage.
Steven Taylor cited the conflict, along with the Second Dalek War and the Third Dalek War, as factors which put an end to Earth's expansionist phase, leaving planets like Mechanus uncolonised. (PROSE: The Chase)