Since the Bosnian crisis of 1908–09, Austrian diplomats had been convinced that war with Serbia was bound to come. Aehrenthal died in February 1912, at a moment when an Italian-Turkish conflict over Tripoli (now in Libya) had provoked anti-Turkish sentiment in the Balkan states (see Italo-Turkish War). Leopold, Graf (count) von Berchtold, who directed Austro-Hungarian foreign policy from 1912 on, did not have the qualities required in such a critical period. Aehrenthal had been able to silence the warmongering activities of Conrad, the Habsburg chief of staff who continued to advocate preventive war against Italy and Serbia, but Berchtold yielded to the aggressive policies of the military and the younger members of his ministry. During the Balkan Wars (1912–13), fought by the Balkan states over the remnants of the Ottoman Empire, Austria-Hungary twice tried to force Serbia to withdraw from positions gained by threatening it with an ultimatum. In February and October 1913, military action against Serbia was contemplated, but in both instances neither Italy nor Germany was willing to guarantee support. Austria-Hungary ultimately had to acquiesce in Serbia’s territorial gains. But by supporting Bulgaria’s claims against Serbia, Austria-Hungary also had alienated Romania, which had shown resentment against the Habsburg monarchy because of the treatment of non-Hungarian nationalities in Hungary. Romania thus joined Italy and Serbia in support of irredentist movements inside the Habsburg monarchy. By 1914, leading government circles in Vienna were convinced that offensive action against the foreign protagonists of irredentist claims was essential to the integrity of the empire.

In June 1914 Archduke Franz Ferdinand, the heir of Franz Joseph, participated in army maneuvers in the provinces of Bosnia and Herzegovina, disregarding warnings that his visit would arouse considerable hostility. When Franz Ferdinand and his wife were assassinated by the Bosnian Serb nationalist Gavrilo Princip at Sarajevo (Bosnia-Herzegovina) on June 28, 1914, the Austro-Hungarian foreign office decided to use the opportunity for a final reckoning with the Serbian danger. The support of Germany was sought and received, and the Austro-Hungarian foreign office drafted an ultimatum putting the responsibility for the assassination on the Serbian government and demanding full satisfaction. The attitude of the foreign office was shared by Conrad and the Austrian prime minister, Stürgkh, but it was opposed by the Hungarian prime minister, István, Count Tisza, who wanted an assurance that a military move against Serbia would not result in territorial acquisitions and thus increase the Serb element in the monarchy. His demand satisfied, Tisza joined the advocates of war.

In ministerial meetings on July 15 and 19, a deliberately provocative ultimatum was drafted in words that supposedly excluded the possibility of acceptance by Serbia. The ultimatum was handed to the Serbian government on July 23. The Serbian answer, handed in on time on July 25, was declared insufficient, though Serbia had agreed to all Austro-Hungarian demands except for two that, in effect, entailed constitutional changes in the Serbian government. These demands were that certain unnamed Serbian officials be dismissed at the whim of Austria-Hungary and that Austro-Hungarian officials participate, on Serbian soil, in the suppression of organizations hostile to Austria-Hungary and in the judicial proceedings against their members. In its reply, the Serbian government pointed out that such demands were unprecedented in relations between sovereign states, but it nevertheless agreed to submit the matter to the international Permanent Court of Arbitration or to the arbitration of the Great Powers (comprising France, Germany, Great Britain, and Russia, in addition to Austria). On receiving this reply, the Austro-Hungarian ambassador left Belgrade (Serbia), severing diplomatic relations between the two countries.

Foreign Minister Berchtold and his government were clearly determined to make war on Serbia, regardless of the fact that such action might result in war between the Great Powers. While the European governments frantically tried to offer compromise solutions, Austria decided on a fait accompli. On July 28, 1914, Berchtold asked Franz Joseph to sign the declaration of war, informing him that

it cannot be excluded that the [Triple] Entente powers [Russia, France, and Great Britain] might make another move to bring about a peaceful settlement of the conflict unless a declaration of war establishes a fait accompli [eine klare Situation geschaffen].

In the meantime, the German government had taken control of the situation. Placing German strategic and national plans over Austro-Hungarian interests, Germany changed the Balkan conflict into a continental war by declaring war against Russia and France. (See World War I.)