In 2370 the Federation had their first direct encounter with a powerful Gamma Quadrant civilisation known as "The Dominion". The encounter led to the loss of the USS Odyssey with all hands ; a follow up mission by Commander Sisko made it clear that the Dominion intended to conquer the Alpha quadrant, by subversion if possible or by force of arms if necessary. 
The Federation's preparations for the Dominion onslaught were largely defensive - the Defiant was stationed at Deep Space Nine  and a massive upgrading of the station's weapon systems was undertaken.  Series production of the Defiant class was also commenced.  However, other powers planned a more aggressive response. In 2371 rumours reached The Maquis that the Cardassian Obsidian Order were carrying out a mysterious operation in the Orias star system. Despite stealing the Defiant and attempting to reach Orias, the Maquis were unable to determine exactly what was taking place there.  Further investigation by the Cardassian government also apparently proved fruitless.
It transpired that Enabran Tain, the ex-head of the Obsidian Order who had been living in retirement on Arawath , had been perturbed by the lack of offensive action by the major powers of the Alpha and Beta Quadrants in face of the Dominion threat. He had contacted the Romulan Tal'Shiar intelligence agency and together they had created a plan aimed at ending the threat by a "decapitation" strike on the Dominion. They planned to assemble a significant force of both Cardassian and Romulan warships which would travel to the Founder's home world and destroy the surface, killing all the Founders on the planet. Since the Jem'Hadar where dependant on the drug ketracel white which only the Founders could provide, Tain expected that the vast majority of the Jem'Hadar would then die over the following weeks. Without the Founders or the Jem'hadar, the remnants of the Dominion would then fall once and for all. 
The Obsidian Order used the Orias system to construct a fleet of Keldon class ships, something which violated their founding charter. The ships were equipped with cloaking devices by the Tal Shiar, who in turn provided their own force of D'deridex class warbirds. The two fleets rendezvoused close to Deep Space Nine; Tain had decided to offer his old friend and assistant Elim Garak a chance to join the effort, an opportunity which Garak accepted enthusiastically.  Odo was also taken aboard the fleet and interrogated for information on the Founders. The fleet passed through the wormhole to Dominion space, transmitting messages to their respective governments which explained the plan and the motivations behind it. Neither the Romulans, Cardassians or even the Federation chose to intervene, at least in part because the plan seemed to have a fair chance of success. Vice Admiral Toddman ordered Deep Space Nine's the civilian population evacuated and sent a force of nine starships to reinforce the station in the event of Dominion reprisals. Meanwhile, Commander Benjamin Sisko disobeyed orders and took the Defiant into the Gamma Quadrant, in hopes of recovering Odo and Garak. 
Unknown to both the Order and the Tal'Shiar, the Founders had been aware of the plan from the outset and had decided to use this opportunity to cripple both of those organisations. The Romulan Colonel Lovok had been replaced by a Founder infiltrator, who had done everything possible to encourage the plan. The Founder's homeworld had been completely evacuated and false life-signs planted on the surface. A force of 150 Jem'hadar attack ships was hidden within the Omarion Nebula to await the fleet's arrival. 
Determined to retrieve Odo, Commander Sisko violated Admiral Toddman's orders and took the Defiant through the wormhole to pursue the fleet. Although the ship's cloaking device was disabled by Commander Eddington in an attempt to prevent the violation of orders, O'Brien was able to repair the damage and the ship resumed its course after a delay of only a few hours. 
Meanwhile, the Dominion's trap worked perfectly. The fleet launched their attack, doing massive damage to the Founder's planet - thirty percent of the entire crust was destroyed in the opening volley - but Tain was taken completely by surprise when the Jem'Hadar launched their attack. Massively outnumbered, the fleet took heavy damage from the Jem'Hadar. Lovok offered Odo the chance to once again rejoin his people, and when this was declined he assisted Odo and Garak in escaping from the Warbird which had been holding them aboard the Runabout USS Mekong. Although the Runabout took fire from Jem'Hadar forces, the Defiant arrived in time to rescue the pair and escaped the scene of the battle. The remainder of the fleet was subsequently annihilated  though some prisoners were taken, including Tain. 
The Battle of the Omarion Nebula was a disaster for both the Tal'Shiar and the Obsidian Order. Both organisations lost countless resources and personnel, setbacks which would cripple them for years afterwards. They had originally been targeted because the Founders considered them ruthless and efficient organizations - after the battle, this was true of neither one. 
In the longer term, the battle would have other repercussions. In particular, the devastation of the Obsidian Order may well have been a major factor in the fall of the Cardassian government just months later , an event which prompted the Klingon's invasion of Cardassia and the subsequent brief war between the Federation and Klingon Empire.