Claim: WWI began in Europe.

Austria-Hungary , often referred to as the Austro-Hungarian Empire in English-language sources , was a constitutional union of the Austrian Empire -LRB- the Kingdoms and Lands Represented in the Imperial Council , or Cisleithania -RRB- and the Kingdom of Hungary -LRB- Lands of the Crown of Saint Stephen or Transleithania -RRB- that existed from 1867 to 1918 , when it collapsed as a result of defeat in World War I . The union was a result of the Austro-Hungarian Compromise of 1867 and came into existence on 30 March 1867 . Austria-Hungary consisted of two monarchies -LRB- Austria and Hungary -RRB- , and one autonomous region : the Kingdom of Croatia-Slavonia under the Hungarian crown , which negotiated the Croatian -- Hungarian Settlement -LRB- Nagodba -RRB- in 1868 . It was ruled by the House of Habsburg , and constituted the last phase in the constitutional evolution of the Habsburg Monarchy . Following the 1867 reforms , the Austrian and the Hungarian states were co-equal . Foreign affairs and the military came under joint oversight , but all other governmental faculties were divided between respective states .   Austria-Hungary was a multinational state and one of the world 's great powers at the time . Austria-Hungary was geographically the second-largest country in Europe after the Russian Empire , at 621538 km2 , and the third-most populous -LRB- after Russia and the German Empire -RRB- . The Empire built up the fourth-largest machine building industry of the world , after the United States , Germany , and the United Kingdom . Austria-Hungary also became the world 's third largest manufacturer and exporter of electric home appliances , electric industrial appliances and power generation apparatus for power plants , after the United States and the German Empire .   After 1878 , Bosnia and Herzegovina was under Austro-Hungarian military and civilian rule until it was fully annexed in 1908 , provoking the Bosnian crisis among the other powers . Sandžak / Raška , de jure northern part of the Ottoman Sanjak of Novi Pazar -LRB- in modern-day Montenegro and Serbia -RRB- , was also under de facto joint occupation during that period but the Austro-Hungarian army withdrew as part of their annexation of Bosnia . The annexation of Bosnia also led to Islam being recognized as an official state religion due to Bosnia 's Muslim population .   Austria-Hungary was one of the Central Powers in World War I . It was already effectively dissolved by the time the military authorities signed the armistice of Villa Giusti on 3 November 1918 . The Kingdom of Hungary and the First Austrian Republic were treated as its successors de jure , whereas the independence of the West Slavs and South Slavs of the Empire as the First Czechoslovak Republic , the Second Polish Republic and the Kingdom of Yugoslavia , respectively , and most of the territorial demands of the Kingdom of Romania were also recognized by the victorious powers in 1920 .