According to the crew of Kormoran, the Australian warship did not appear to be fully prepared for the battle – her main guns were trained on Kormoran, but her secondary guns were unmanned. They reported that Sydney was hit 50 times by the raider's 150 mm (5.9 in) heavy guns — a simultaneous salvo from the Kormoran's 37 mm guns and 20 mm anti-aircraft weapons caused severe casualties on its bridge and open decks. At the start of the exchange of fire, Sydney's gunnery direction tower was hit, impeding the ability of her turret crews to fire accurately. The Supermarine Seagull seaplane on board Sydney was hit, and its fuel caused a fire amidships.
However, the turrets on Sydney opened fire almost immediately, with a "bracket salvo" that fell on either side of Kormoran. Sydney then suffered hits from two salvoes on her bridge and midships section. It appears that the forward turrets ("A" and "B") were put out of action leaving only the after turrets ("X" and "Y") operational. The crew of Kormoran reported that Sydney's "X" turret opened fast and accurate fire, hitting Kormoran in the funnel and engine room, which caught fire. "Y" turret is said to have fired only two or three salvoes, all of which went over. Sydney was also hit in the bow by at least one torpedo.
Location of the battle between Sydney and Kormoran.Sydney then headed directly at Kormoran, and completed a 180-degree turn in order to use her starboard torpedoes. During the turn, "B" turret exploded; the top was blown off and fell overboard. Four torpedoes were fired, but were near misses behind Kormoran. At the same time, the engines on Kormoran broke down.
Critically, the volume of hits that Sydney sustained along both sides of her superstructure saw the almost complete destruction of her lifeboats and rafts.
The Australian ship left the scene southwards, still under fire from Kormoran's rear guns, until 6:25 pm, when Kormoran was abandoned. The Germans reported seeing Sydney on fire at the horizon until 10 pm that night, and saw flames emerging from time to time two hours further. Some time after the Australian ship disappeared from view, the Germans heard several loud explosions, and believed these to be fire reaching magazines on Sydney. None of the 645 RAN and RAAF personnel on Sydney were seen again (with the possible exception of an unidentified body later washed up on Christmas Island).