For much of the 19th century, the major European powers maintained a tenuous balance of power among themselves, known as the Concert of Europe. After 1848, this was challenged by a variety of factors, including Britain's withdrawal into so-called splendid isolation, the decline of the Ottoman Empire and the rise of Prussia under Otto von Bismarck. The 1866 Austro-Prussian War established Prussian hegemony in Germany, while victory in the 1870–1871 Franco-Prussian War allowed Bismarck to consolidate the German states into a German Empire under Prussian leadership.

After 1871, the creation of a unified Reich, supported by French indemnity payments and the annexation of Alsace-Lorraine, led to a huge increase in German industrial strength. Backed by Wilhelm II, Admiral Alfred von Tirpitz sought to exploit this to build a Kaiserliche Marine, or Imperial German Navy, able to compete with the British Royal Navy for world naval supremacy. He was greatly influenced by US naval strategist Alfred Thayer Mahan, who argued possession of a blue-water navy was vital for global power projection.

The years before 1914 were marked by a series of crises in the Balkans as other powers sought to benefit from Ottoman decline. While Pan-Slavic and Orthodox Russia considered itself the protector of Serbia and other Slav states, they preferred the strategically vital Bosporus straits be controlled by a weak Ottoman government, rather than an ambitious Slav power like Bulgaria. Since Russia had its own ambitions in Eastern Turkey and their clients had over-lapping claims in the Balkans, balancing them divided Russian policy makers and added to regional instability.

The Great Powers sought to re-assert control through the 1913 Treaty of London, which created an independent Albania, while enlarging the territories of Bulgaria, Serbia, Montenegro and Greece. However, disputes between the victors sparked the 33-day Second Balkan War, when Bulgaria attacked Serbia and Greece on 16 June 1913; it was defeated, losing most of Macedonia to Serbia and Greece, and Southern Dobruja to Romania. The result was that even countries which benefited from the Balkan Wars, such as Serbia and Greece, felt cheated of their "rightful gains", while for Austria it demonstrated the apparent indifference with which other powers viewed their concerns, including Germany. This complex mix of resentment, nationalism and insecurity helps explain why the pre-1914 Balkans became known as the "powder keg of Europe".