Confronted by escalating international condemnation of its war in Ireland, the British government under David Lloyd George sought to push through Home Rule, which had been shelved until the 'Ulster Question' could be solved.
'The treaty created the 'Irish Free State', which had 'dominion status' within the British Commonwealth.'
The solution came in the form of the partition of Ireland into two parts under the Government of Ireland Act, which became law in May 1921. The six predominantly Protestant counties of Ulster would become the 'north', and the remaining 26 predominantly Catholic counties would become the 'south'.
In this way Northern Ireland was created. Its parliament was opened by George V in June 1921, and immediate overtures to end the fighting in the rest of the island began.
Negotiations took place over the following months between Irish nationalist leaders and the British government. They resulted in a treaty creating the 'Irish Free State', which had 'dominion status' within the British Commonwealth, but fell short of full independence.
The treaty split Irish nationalists. Despite great pains being taken in the Dail to resolve the dispute peaceably, a split in the IRA between pro-treaty and anti-treaty members led rapidly to armed conflict and then all-out civil war. Collins led the pro-treaty government forces, while de Valera leant his support to the anti-treaty 'Irregulars'.
The bloody and bitter internecine civil war that followed would ultimately claim the lives of Collins and many other talented Irish leaders, but nonetheless result in a victory for the Irish Free State government. De Valera would subsequently rejoin the political process and help steer southern Ireland to full independence in 1949.
In Northern Ireland, the IRA had begun a campaign of violence even before partition became a reality in 1921. In response, the Ulster Volunteer Force was revived and thus the new nation experienced sectarian bloodshed from its very inception.