Modern Austrian history begins with the defeat of the Axis Powers in the First World War, when the non-German speaking territories of the former Habsburg Empire achieved independence. The Republic of Austria was established in 1918. The inter-war period was marked by severe social conflicts arising from economic and political instability, culminating in the (fairly benign) absolutist rule of Dollfuss, his assassination in 1934, at Nazi behest, and the gradual rise of pro-Nazi Austrian groups. In 1938, Hitler incorporated Austria into the German Reich with the Anschlub ('Joining').

After the Second World War, Austria was occupied by the USSR, US, UK and France for 10 years, and did not regain its independence until May 1955. On 15 May, after long and difficult negotiations between the 4 powers and Austria, the State Treaty was signed. The key aspect was Austria's commitment to "permanent" neutrality, which Austrians subsequently came to see as a basic element of the Austrian state's identity. Austria has used its neutrality to play a mediating role, often offering Vienna as a venue for meetings of rival parties during the Cold War and since. Following East-West rapprochement and the collapse of the former Soviet Union in 1989, and Austria's accession to the European Union in 1995, the logic of neutrality is no longer so absolute. Austria has participated in NATO-led military missions, EU-led civilian missions in the former Yugoslavia and recently in the EU humanitarian mission in Chad (EUFOR) and the EU Rule of Law Mission in Kosovo ("EULEX"). However, there remains a strong political attachment to neutrality, and there is no early prospect of it being formally rescinded.

Culture on the territory of what is today Austria can be traced back to around 1050 B.C. with the Hallstatt and La Tene cultures. However, a culture of Austria as we know it today began to take shape when the Austrian lands were part of the Holy Roman Empire, with the Privilegium Minus of 1156, which elevated Austria to the status of a Duchy, marking an important step in its development. Austrian culture has largely been influenced by its past and present neighbours: Italy, Poland, Germany, Hungary and Bohemia.