New calls to reinstate Lysander as admiral were ignored and he was relegated to second in command under Aracus. All, including the new commander, knew who the sailors would obey in battle. Once the fleet was rebuilt, Lysander met with Cyrus at Sardis and then sailed on to the Hellespont, with the Athenians in pursuit. Then, after several days of maneuvering, Lysander caught them unprepared and won a decisive victory at Aegospotami. With Athens starving and their fleet destroyed, the men of Athens had no choice but to negotiate a peace. Lysander was recalled to Piraeus to represent Sparta after he had stopped off and taken Lesbos.
The following years were not kind to Lysander. He was pulled off command over Athens when the Spartan King Pausanius thought he was gaining too much power. Then he became involved with the Spartan succession in 401 B.C. when he convinced the Ephors to elect Agesilaus II Spartan King after the death of Agis II.