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The First Battle of West Harbor took place at harvest time, many years prior to the beginning of the game, when the King of Shadows first tried to reenter the Material Plane. Most of West Harbor's citizens were killed in the fighting.
At the heart of the battle was the King himself, fighting the warlock Ammon Jerro. Jerro had somehow acquired the Silver Sword of Gith, an extra-planar artifact capable of destroying planar travelers. The duel can be seen in the game's opening cinematic.
In the end the King was defeated, but not destroyed, and the Sword of Gith shattered into many shards that scattered throughout Faerun. Two remained in West Harbor, and one embedded itself within the chest of the infant player. The magical explosion also left a scar on the earth where no grass would ever grow.
In the aftermath, the survivors resettled West Harbor.
As seen in the Prologue, the battle was commemorated each year at the Harvest Festival.