On December 23, 1916, forces of the British Empire (largely the Anzac troops from Australia and New Zealand) defeat forces of the Ottoman Empire in the Battle of Magdhaba. Following a defeat at the hands of the British forces in the Battle of Romani in August of 1916, the Ottomans had been forced to retreat to El Arish. In December British and Anzac forces arrived in El Arish only to find it abandoned; however, a garrison of Ottoman troops held a strong defensive position nearby at Magdhaba. At 06:30 on the 23rd British troops (mounted infantry of the Australian 1st and 3rd Light Horse Brigades, the New Zealand Mounted Rifles Brigade, and three battalions of the Imperial Camel Brigade) assaulted the Ottoman position at Magdhaba. By ~17:00, Ottoman resistance had ceased and Magdhaba and El Arish fell into the control of the British Empire.

After the capture of El Arish, the 52nd Lowland Division and the 5th Mounted Yeomanry Brigade advanced into the town to fortify the British position there. Due to its location on the Mediterranean coast, El Arish provided an convenient port to supply the British forces in the Sinai. The arrival of the British railway in the town on January 4, 1917, further boosted the strategic value of the town.