World War I started in the Balkans. On June 28, 1914, Archduke Franz Ferdinand of Austria-Hungary and his wife were murdered in Sarajevo, Bosnia-Herzegovina. Bosnia-Herzegovina was an Austrian territory claimed by Serbia, a little Balkan country where the murder had been planned. Austria-Hungary decided to punish Serbia, and Germany promised to support these efforts. Austria-Hungary declared war on Serbia on July 28, 1914. Russia prepared for war to support Serbia. Germany then declared war on Russia. After France called up its troops to support Russia, Germany went to war against France. In an effort to reach Paris quickly, German troops invaded neutral Belgium. The United Kingdom then declared war on Germany.

Germany won the opening battles of the war, but the United Kingdom, France, and Russia continued to fight. Germany, Austria-Hungary, and their allies were called the Central Powers. The nations opposing them were called the Allies. As the war dragged on, other countries became involved. Almost all of them joined the Allies. In 1915, Italy joined the Allies, hoping to gain Austrian land. In 1917, the United States entered the war on the Allied side.

Despite the size and strength of the Allies, Germany seemed close to winning the war. After 1914, German troops held Luxembourg, most of Belgium, and part of northern France. In 1917, Germany won on the Eastern Front as the Russian war effort collapsed. But by 1918, Germany's armies were exhausted. Supplies were running low and there was social unrest at home. Meanwhile, an increasing number of fresh American troops were arriving to reinforce the Allies. In the summer of 1918, American troops helped stop the last great German offensive in the west. On November 11, Germany signed an armistice.

Under the Treaty of Versailles, which was signed after World War I, Germany lost its colonies and some of its European territory. Alsace and the German part of Lorraine were returned to France. Poland was reestablished, and it received Posen (now Poznan), some of Silesia, and part of West Prussia. France got control of the Saar region for 15 years. The treaty also placed the Rhineland under Allied occupation for 15 years. Germany's army was reduced to 100,000 men, and the nation was forbidden from having an air force. Germany was also required to pay the Allies reparations (payments for war damages), which were later set at about $33 billion.