In Ireland, the two nations theory proposes that there are two peoples on the island with national rights to self-determination: an Irish nation substantially formed by the Roman Catholic majority; and, concentrated in the north-east (in parts of Ulster), a Protestant community of Scottish and English descent which is insistent on a continued union with Great Britain. Emerging in the 19th century as a response to the drive for Irish self-government, variants of the theory gained renewed currency from the late 1960s when the onset of Northern Ireland Troubles called the 1921 partition settlement into question. Persuaded that there was a prospect of British withdrawal, paramilitary-associated loyalists considered the possibility of Ulster Protestants constituting the core of a national community independent of both London and Dublin. Broader acceptance was found among unionists for a theory reformulated on purportedly Leninist principles by a small left-wing grouping. While blaming the renewed conflict on British misrule, this rejected Ulster nationalism and accepted unionism as a popular expression of a legitimate British interest and identity. Since the 1998 Belfast Agreement, the two-nations perspective has been challenged within unionism by renewed interest in the language and narrative of Ulster Scots, and by the British government's formal recognition of Ulster Scots in 2022 as a "national minority" within the framework of an agreement re-establishing a devolved Northern Ireland Executive.

According to S J Connolly's Oxford Companion to Irish History, the two nations theory first appeared in the book Ulster As It Is (1896) by the Unionist Thomas Macknight. But as early as 1843, while protesting that its readers wished only to preserve the Union, Belfast's leading paper, the Northern Whig, had proposed that if differences in "race" and "interests" argue for Ireland's separation from Great Britain then "the Northern 'aliens', holders of 'foreign heresies' (as [Daniel] O'Connell says they are)" should have their own "distinct kingdom", Belfast as its capital.

In response to the First Home rule Bill in 1886, Radical Unionists (Liberals who proposed federalising the relationship between all countries of the United Kingdom) likewise argued that "the Protestant part of Ulster should receive special treatment . . . on grounds identical with those that support the general contention for [Irish] Home Rule" "Ulster", in the view of the Radical leader, John Bright, "may be deemed a nationality differing from the rest of Ireland as much as Wales differs from England". Northern unionists expressed no interest in a Belfast parliament, but in summarising The Case Against Home Rule (1912), L. S. Amery similarly insisted that "if Irish Nationalism constitutes a nation, then Ulster is a nation too". The same position was taken by the Tory writer W F Moneypenny in his 1913 book The Two Irish Nations: An Essay on Home Rule, and was later taken up by the British Conservative politician Bonar Law.

Irish nationalists rejected these positions. O'Connell suggested that in Ireland Protestantism was very largely a function of political privileges sustained by the connection with England, so that "If the Union were repealed and the exclusive system abolished, the great mass of the Protestant community would with little delay melt into the overwhelming majority of the Irish nation". This remained the position of constitutional nationalism (John Redmond declared "'the two nation theory' an abomination and a blasphemy") and of the republican movement.

The 1916 Proclamation of the Irish Republic spoke of "the differences carefully fostered by an alien Government, which have divided a minority from the majority". Michael Collins, writing in the wake of the Anglo-Irish Treaty of 1921, insisted that had Britain not maintained this policy of divide et impera, "Protestant and Catholic would have learned to live side by side in amity and cooperation" and Ireland would long since have "taken her rightful place in the world". Collins's civil war nemesis, Éamon de Valera, articulated the same conviction, although like Collins he appeared willing to accept some form of partition as a temporary expedient. According to De Valera, "the essence of the persistence of Partition" was that Unionists perceived themselves as a governing group who feared that they would become a minority inside a temperamentally different State.

There was a notable Sinn Féin dissenter from the one-nation doctrine. When Lloyd George unveiled the Government of Ireland Bill of 1920, Belfast's leading nationalist paper, the Irish News, ran an editorial suggesting that the case for partition had been made for the Prime Minister in an "eloquent exposition of Ireland’s ‘dual nationhood'" by Fr. Michael O’Flanagan, Sinn Féin's Vice-President. In an open letter to Lloyd George published in June 1916, two months after the Easter Rising, O'Flanagan had argued that while "geography has worked hard to make one nation out of Ireland; history has worked against it", and that the enduring division could not, or should not, be overcome by force:

The island of Ireland and the national unit of Ireland simply do not coincide. In the last analysis the test of nationality is the wish of the people… The Unionists of Ulster have never transferred their love and allegiance to Ireland. They may be Irelanders, using Ireland as a geographical term, but they are not Irish in the national sense… We claim the right to decide what is to be our nation. We refuse them the same right. After three hundred years England has begun to despair of making us love her by force. And so we are anxious to start where England left off. And we are going to compel Antrim and Down to love us by force.

O'Flanagan (who was to oppose the 1921 Anglo-Irish Treaty) was committed to an Ireland independent and united, but believed it could not be achieved without acknowledging the complications that Protestant Ulster presented. (Citing O'Flanagan, in advance of India's partition the Indian jurist and social reformer Babasaheb Ambedkar made the same argument in respect of sub-continent's Muslim minority).