Though Americans would be able to look back in hindsight at 1777 as the year the American Revolution reached a turning point in favor of the colonists, the winter of 1777 was still considered a miserable point for the cause at the time. Although Benedict Arnold and Horatio Gates were victorious at Saratoga, George Washington and his Continental army had been less successful. After being pushed back into Pennsylvania at the end of 1776, Washington attempted to surround the British army as it invaded Philadelphia in 1777, but he failed miserably. At the Battle of Germantown, Washington was defeated and forced to retreat, and on October 19th, 1777, the British entered Philadelphia and the Continental Congress fled to nearby York. Ultimately, it would be the French, not Washington, who forced the British out of Philadelphia. After learning of the French entry into the war, the British immediately abandoned Philadelphia to garrison New York City, which the British feared could be taken by French naval assault.

After another disappointing year of defeats, Washington's 11,000 men entered winter quarters at Valley Forge in Pennsylvania, about 20 miles outside of occupied Philadelphia. His army had repeatedly faced a lack of discipline and chronic disorganization, and Congress began to consider replacing Washington as Commander in Chief after the fall of Philadelphia. General Gates, who had received the lion's share of the credit for Saratoga by marginalizing Benedict Arnold's role in its success when he submitted his report to the Congress, was floated as an alternative, and Washington was understandably devastated. Making matters worse, the winter was unusually harsh, leading to an estimated 2,000 or so deaths in camp from diseases. Gouverneur Morris would later call the soldiers at Valley Forge a "skeleton of an army...in a naked, starving condition, out of health, out of spirits."

However, it was at Valley Forge that Washington truly forged his army. He introduced a more rigorous training program for his troops, sponsored by Prussian General Friedrich Wilhelm von Steuben, who had fought with Frederick the Great. Like the Marquis de Lafayette before him, von Steuben came to Washington's army via the recommendation of Benjamin Franklin, who hoped to use their appointments to curry political favor internationally. Despite speaking little English, von Steuben went about drafting a drill manual in French, and he personally presided over training drills and military parades. With the help of von Steuben, the Continental Army left Valley Forge in the spring of 1778 a more disciplined army than ever before, and the worst of Washington's failures were behind him.