Operation Monopoly was a secret plan by the United States Federal Bureau of Investigation (FBI) to construct a tunnel underneath the Soviet Embassy in Washington, D.C., to gather secret intelligence, in effect from 1977 until its public discovery in 2001.

The embassy of the Soviet Union was relocated to a new building complex in 1977. The US government was afraid that with the new location, the Soviets would be able to use new technology to pick up conversations in the White House and the Capitol Building. In response to this, United States intelligence launched surveillance of their own. The FBI purchased a home that was across the street to set up a spy operation on the Soviet Embassy, and in 1977 began to dig the tunnel that would go beneath it. However, the operation was terribly planned, and construction of the tunnel encountered multiple problems. Leaks, technical issues, and insufficient knowledge of the embassy's layout caused the operation to fail. FBI assistant director John F. Lewis has noted that the tunnel produced "no information of any kind." The failure of the project is also partially explained by the revelation in 2001 that a double agent in the FBI, Robert Hanssen, had disclosed the construction of the tunnel to the Soviets while it was being built.

A history of spying between the Soviet Union and the United States was well established before the development of Operation Monopoly; several instances of eavesdropping between the two rivals have been uncovered. The earliest known incident took place in August 1945 when the Soviet Union had a delegation from the Young Pioneer organization present a wooden plaque of the Great Seal of the United States to the American ambassador Averell Harriman as a "gesture of friendship." Officially, it was intended to symbolize the camaraderie and collaboration between the two nations during the Second World War. The plaque was hung in the study of the U.S. ambassador in his Moscow residence. This gift actually had an ulterior motive, as it was part of an elaborate intelligence operation to eavesdrop on the diplomat. Within the Great Seal, now colloquially referred to as "The Thing", a surveillance instrument had been planted, which provided the Soviets with confidential intelligence from within the American Ambassador's residence for seven years. The device remained undetected for so long because it was a passive listening device that could be detected only when radio waves at specific frequencies were sent toward it through an external transmitter. This oversight allowed the Soviets to collect valuable information pertaining to American positions on political, military, diplomatic, economic, and technological topics.

There were other instances of surveillance as well, some which went undetected for long periods of time. Forty listening devices were uncovered in the American embassy in Moscow in 1964. These bugs had long been suspected but were found only after embassy walls were broken down. It is unknown how long they had been in place, but given their visible rust it has been inferred that they were not recent installations. In 1984, the typewriters used by U.S. diplomats were found to have Soviet transmitters concealed inside of them which allowed Soviet analysts to decipher texts that were written. When a new U.S. embassy building began construction in 1979, listening devices were built into the structure of the building while it was under construction, leaving the Americans vulnerable to Soviet surveillance operations. After the discovery of these listening devices in 1985, the "Great Transmitter", as the embassy came to be nicknamed, eventually was taken apart and reconstructed at a cost of US$240 million.

The Americans for their part also took part in covert countersurveillance. Operation Gold was conducted by the Central Intelligence Agency (CIA) in coordination with Britain's MI6 Secret Intelligence Service (SIS). A tunnel was built underneath the world's most heavily patrolled border into the Soviet occupied zone in Berlin in the 1950s to covertly monitor landline communication of the Soviet Army headquarters. While promising at first, the operation failed because British double agent George Blake informed Soviet Intelligence of its existence before it was put into use.

In the midst of the Cold War, in late 1977, the Soviet Union began building a new embassy at 2650 Wisconsin Avenue NW, Washington D.C. United States intelligence worried that, because the embassy was being built on Mount Alto, the second highest point in Washington, the Soviets would have an ideal location for eavesdropping on radio communications. It was possible that, through intercepting microwaves, they could listen in on telephone calls from the White House, State Department, the Pentagon, and the CIA. Dick Alu, a former FBI agent, says "we were absolutely beside ourselves. [The State Department] never bothered to consult the intelligence community, the FBI or NSA."

To counter any eavesdropping that the Soviets could commit, US intelligence formulated a plan to bug the new embassy by digging a tunnel underneath its construction site. They would then install eavesdropping equipment inside it, allowing them an ear into the workings of the embassy. They believed this would give them access to Soviet intelligence and also information on whether the Soviets were eavesdropping on Americans. The FBI purchased a three-bedroom house at 2619 Wisconsin Avenue NW, close to the site where the embassy was being built, which allowed them a place to observe the comings and goings of the Soviet embassy. They used security cameras in the windows and photographers to capture every moment. John Galuardi, regional administrator for the General Services Administration at the time, was in charge of the property that the Soviet embassy was going to be built on. Soon after the plans were made to build the embassy, Galuardi was approached by the FBI. They asked him to send workers to the site to cut down three trees on the perimeter of the property, and then to hide the stumps by making it look as if grass seed was going to be planted. This allowed the FBI an unimpeded view to the construction site from the spy house. The same house was also rumored to be the location of the entrance to the tunnel, an inconspicuous place to begin construction as there were already dump trucks and bulldozers in the area for the building of the embassy.

In 1977 the FBI hired a contractor and began construction, which took more than a decade and cost hundreds of millions of dollars. The classified project was then given the code name "Monopoly". As the tunnel was constructed, the FBI also monitored the construction of the embassy. They had agents pose as construction workers and subcontractors, and, on the grounds of being a "good American", they also recruited some real construction workers to plant bugs in the actual embassy itself. When construction finished for the day and workers went home, the construction site for the embassy continued to be surveilled from the house on Wisconsin Avenue.