The German Empire evolved from the Wars of German Unification (1864 - 1871 ), which were fought under Otto von Bismarck's strategical leadership. The first Unification War was fought between Prussia in alliance with Austria against Denmark in 1864. After Denmark had lost the war, Prussia and Austria received the northern states of Schleswig and Holstein. Whereas the new territory was connected to Prussia, Holstein was an enclave for Austria with no significant seaport. This has led to the second engagement that was fought between Prussia and Austria in 1866 and resulted in Austria's defeat and the formation of the North German Confederation. An outcome that opened the door for a German Empire without Prussia's rival Austria. The third and last Unification War was a military conflict with France in 1870. The North German Confederation's victory was possible because of Bismarck's strategic alliances with the southern German states. The last war had a special historic relevance because it appealed to a new national unity and resulted in The German Empire's formation on January 1, 1871, when the new constitution came into affect. On January 18, 1871, Wilhelm I was proclaimed German emperor in the Hall of Mirrors (Versailles).

Twenty-two individual states and three Free Cities formed the German Empire that was a constitutional state with 40 million citizens. All 25 federal states were represented in the Bundesrat, which created together with the emperor the executive branch that could declare war and peace. The Bundestag and the Chancellor were the other two political entities that governed the German Empire. Otto von Bismarck was the most important and influential Chancellor of all eight officeholders who served under the Empire's banner.

Otto von Bismarck became a Prussian Prime Minister and State Secretary in 1862. Wilhelm I. sought a military reform in which the Prussian army would be strengthened but encountered resistance from liberal forces who used the Prussian constitution to block the reform. Bismarck argued that the state business needed to be continued without a parliament if necessary, using a gap in the Prussian constitution and arranged in this way the desired reform. Bismarck enlarged the military while at the same time pointing out that the military's virtues could serve as enrichment for daily life and society. He argued that Prussias destiny in Germany is not determined by speeches and resolutions but by blood and iron. Whereas the liberal forces reacted reluctant to his "Blood and Iron" speech in 1862, many supported him after the victory against rival Austria. The North German Confederation served as a precursor for German unity. In 1870, Bismarck achieved a good starting position because of alliances with southern German states and good relations with Russia for his policy stroke against France. The final War of German unification (1870 - 1871) was not started by a German declaration of war but by France. The war was short and the victory of Sedan set the course for Germany's victory. It is noteworthy that Emperor Napoleon III (not to be confused with Bonaparte) was captured along with 100000 French soldiers by German military forces. The German Empire was proclaimed on January 18, 1871, in the Hall of Mirrors in Versailles (officially January 1 by constitution). Wilhelm II became German emperor and Otto von Bismarck, chancellor of the German Reich and a national hero. The German military was not only celebrated but started to serve as a role model for a German way of life.

Bismarck's domestic policy was characterized by several undertakings to unify the majority of the Reich's citizens. Some groups, namely the Catholics and the socialists, were considered enemies of the Empire. Bismarck demanded that the first group should obey the Emperor only instead of the Pope. The socialists, however, were considered enemies because they influenced labor. The socialist's agenda often stood in stark contrast to Bismarck's goals, namely a state in which the Emperor, the aristocracy, the chancellor, and a selected group from the upper-class should be in charge of political affairs. Bismarck passed a series of laws or social securities (Sozialgesetze) for the working class's profit to prevent the socialist's increasing power. These achievements that had a substantial impact on daily life are still in place in today's Germany. The Sozialgesetze included health and disability insurance for the working force and a pension as well as a dependent's pension. His contentions with Catholics became known as the culture struggle (Kulturkampf) and resulted in the separation of religion and government.