The war took place after a first contact with an unknown scout ship. No contact was made as the scout ship fled from the encounter with no communications. The Galactic Federation sent a deep space exploration ship to follow the alien ship and attempt to locate the race it belonged too. During the exploration the Phalan Empire was discovered, and their hostile nature exposed by a resistance movement that had sent the original scout ship. The Phalans are humanoid but shorter than humans, with larger heads with limited telepathic abilities. They are extremely imperialistic and had already conquered many worlds when their existence was discovered by the expedition.
When the exploration ship returned bearing news of the Phalan threat, an immediate effort was mounted by the Galactic Federation to put in place a defense network bases along a proposed front in the direction of Phalan space. But the attack didn't materialize as expected and as months dragged into years, budgets were cut and the bases fell into a lax state. When the Phalans did attack, it became clear they had spent their time preparing a huge invasion fleet that consisted of two waves, the first smashed the Federation defense line and proceeded to dash deep into Federation space. It is evident the Phalans expected more resistance, but when none came (many defense bases were not even able to mount fighter defenses due to lack of fuel) The fist wave of ships moved too quickly for the heavier support wave that came behind it. The second wave had huge fortress ships of a size never encountered by the Federation previously.
As the first wave of invaders penetrated Federation space, they effectively lost the ability to support the second wave, a weakness exploited by the counter attack mounted by the Federation. A federation fleet attacked the second wave of Phalan ships and in a savage battle were able to destroy it completely, the fortress ships were vulnerable once their escort ships and fighter cover had been removed. Losses during the battle in the Federation fleet were enough to place the outcome of the next battle in considerable doubt. The first wave Phalan fleet was attacked from behind in deep space and another momentous battle ensued. Phalan tactics were predicated by the false assumption the second wave would arrive, however when that didn't happen, the battle fragmented into a series of cat and mouse chases by Federation ships as the Phalans ships individually broke formation and ran for home.
Though the federation had won the war, they had taken severe losses in the initial stages and as such a decision was made by rulers not to persue the war into Phalan territory