The policy of neutrality was adopted by Ireland's Oireachtas at the instigation of the Taoiseach Éamon de Valera upon the outbreak of World War II in Europe. It was maintained throughout the conflict, in spite of several German air raids by aircraft that missed their intended British targets, and attacks on Ireland's shipping fleet by Allies and Axis alike. Possibilities of both German and British invasions were discussed in Dáil Éireann. Both eventualities were prepared for, although the most detailed preparations were done with the Allies under Plan W. De Valera's ruling party, Fianna Fáil, supported his neutral policy for the duration of the war.

This period is known in Ireland as the Emergency, owing the title to the wording of the constitutional article employed to suspend normal governance of the country.

Pursuing a policy of neutrality required maintaining a balance between the strict observance of non-alignment and the taking of practical steps to repel or discourage an invasion from either of the two warring parties.

Despite the official position of neutrality, there were many unpublicised contraventions of this, such as permitting the use of the Donegal Corridor by Allied military aircraft, and extensive co-operation between Allied and Irish intelligence. The Irish supplied the Allies with detailed weather reports for the Atlantic Ocean, including a weather report from the lighthouse at Blacksod Bay, County Mayo, which prompted the decision to go ahead with the Normandy landings.

Ireland was in 1939 nominally a Dominion of the British Empire and a member of the Commonwealth. The nation had gained de facto independence from Britain after the Irish War of Independence, and the Anglo-Irish Treaty of 1921 declared Ireland to be a "sovereign, independent, democratic state". A new constitution was adopted by a plebiscite in 1937. The Statute of Westminster 1931 meant that unlike in World War I, Britain's entry into the war no longer automatically included its dominions. Thus, in 1939 the Irish Free State had the option of remaining neutral. Relations between Ireland and Britain had been strained for many years; until 1938, for example, the two states had engaged in the Anglo-Irish Trade War.

Nevertheless, Ireland did not sever its vestigial connection with the Crown and it was not until The Republic of Ireland Act 1948 that the final nominal link was severed. No representatives of the new state attended Commonwealth conferences or participated in its affairs, but Ireland remained a legal member until the British Ireland Act 1949, which accepted the declaration of a Republic and formally terminated its membership in the Commonwealth.

Alongside George VI's few remaining powers, the 1937 Constitution had provided that the holder of the new office of President of Ireland was in "Supreme Command" of the Defence Forces.

Irish neutrality was supported by the population of Ireland. Irish citizens could serve in the British armed forces. At least 50,000 fought in the British Army. Others served in the Merchant Navy and Royal Air Force, some rising up the ranks rapidly, such as the youngest wing commander fighter ace in the RAF's history, Brendan Finucane.