Starfleet responded by dispatching the USS Odyssey and a small group of Danube class Runabouts into the Gamma Quadrant. The Odyssey was attacked by three Jem'Hadar attack ships; what followed was one of the most disturbing military encounters since the Borg attack.
The Dominon ships employed a form of phased polaron beam which went through Federation shielding as if it wasn't there. The Odyssey suffered serious damage almost instantly when its port nacelle was damaged; the battle was transformed almost instantly from a search and rescue mission to a fighting retreat.
A valiant effort by the Federation forces held the Jem'Hadar off long enough to make a successful pick up of Captain Sisko, who had escaped from the Jem'Hadar shortly before the battle began. The Starships turned and began to retreat, but a Jem'Hadar attack ship made a direct run on the USS Odyssey, ramming her engineering hull and causing immense damage. The Galaxy class ship subsequently exploded with all hands on board, the third of these ships to be lost.
Although this battle had no major immediate impact on the overall strength or security of the Federation, its implications where deeply disturbing. The Federation had already claimed significant areas within the Gamma Quadrant, and was committed to defending them. In addition, friendly relations had been established with several of the species there. Now an openly hostile force was claiming all of those territories and launching unprovoked attacks. Worse, the Dominon appeared to enjoy a marked technological advantage over the Federation.
Perhaps most disturbing was the revelation that
Eris, a Vorta brought back from the Gamma Quadrant with Captain Sisko,
was in fact an agent of the Dominion sent to gather intelligence on Starfleet.
The entire Odyssey incident was apparently engineered in order to give
the disinformation offered by Eris a degree of urgency so as to ease her
infiltration. The degree of callousness this implied has since been more
than borne out in the Federations dealings with the Dominion.