Since the Estonians’ spring successes, Soviet Russia had been attempting to conclude a peace. In April 1919, the Russians publicly broached the subject of peace talks in a radio broadcast on the 27th and 28th. A subsequent broadcast on July 21st led to the British journalist Arthur Ransome sounding out the Commissar for Foreign Relations Georgy Chicherin on the subject of peace talks. Eventually the Soviet government made a formal offer for negotiations on August 31. The Estonians accepted on 4 September and the first talks took place on 16 September. Not desiring a separate peace, but rather a comprehensive one, Estonia then asked to stop negotiations until Latvia, Lithuania and Finland agreed to participate in joint negotiations.

In the meantime, the 7th and 15th Soviet Armies advanced behind the collapsing White Russian forces and eventually reached the fortifed Estonian border along the Narva River and began to batter it. The first clashes took place on 16 November along the advanced positions on the Luga River line to the northeast. Approximately 40,000 Estonians held off 120,000 Soviets initially, but before long the 7th Red Army managed to penetrate the defenses, at great cost. On 19 November the new Estonian government of Jaan Tõnisson decided to restart talks with Soviet Russia without the participation of the other Baltic States. Pausing at the end of November to replenish their forces, the Soviets resumed the offensive on 7 December, exerting great pressure on Estonia at the negotiating table. The situation became critical on 16 December as the 15th Red Army crossed the Narva River in several places aiming to cut the railroad line from Narva to Tallinn.

Numerous Soviet assaults occurred over the ensuing weeks, but all gains were temporary and always forced back with very heavy losses. The Estonian high command actively reinforced the 1st Division at Narva during the battles, sending in the 3rd Division whose front had been fairly quiet. After suffering 35,000 casualties in heavy battles, with one division completely destroyed, the Red Army was utterly exhausted by the end of December. Negotiations accelerated when it became obvious to the Soviet leaders that they were throwing more men away for no gain. The peace treaty was finally concluded on the last day of the year and a ceasefire went into effect on 3 January 1920.

The Russians ceded all territories lost to Estonia, and agreed to pay 15 million rubles in gold as reparations. In addition, the Estonians racked up the following spoils of war: 73 guns of various calibers, 500 machineguns, 4200 rifles, 13 ships, 18 locomotives, 503 railway cars, and 2.8 million Estonian Kronor worth of trade goods. Sadly, their independence would last scarcely more than 20 years. In 1940 the Soviets, in cooperation with Nazi Germany, would capture the small Baltic state and incorporate Estonia into the Soviet empire for the next 50 years.