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In the aftermath of World War II there were fears of a renewal of German aggression, and on 4 March 1947 the Treaty of Dunkirk was signed by France and the United Kingdom as a Treaty of Alliance and Mutual Assistance in the event of a possible attack. In 1948, this alliance was expanded to include the Benelux countries, in the form of the Western Union, established by the Treaty of Brussels. This organisation was intended to provide Western Europe with a bulwark against the perceived threat of the Soviet Union by means of collective security. However, the parties were too weak militarily to counter the Soviet Armed Forces. Talks for a new military alliance resulted in the signature of the North Atlantic Treaty on 4 April 1949 by the member states of the Western Union plus the United States, Canada, Portugal, Italy, Norway, Denmark and Iceland.

The outbreak of the Korean War led to formation of Supreme Headquarters Allied Powers Europe (SHAPE) in 1951 to direct forces in Europe. SHAPE adopted the Western Union's structures and plans.

In 1952 the post of Secretary General of NATO was established as the organization's chief civilian, the first major NATO maritime exercises began; Exercise Mainbrace, and Greece and Turkey acceeded.

In 1955 West Germany was also incorporated into NATO, which resulted in the creation of the Soviet-dominated Warsaw Pact, delineating the two opposing sides of the Cold War.

In February 1959, France withdrew its Mediterranean Fleet from NATO command, and later banned the stationing of foreign nuclear weapons on French soil. This caused the United States to transfer two hundred military aircraft out of France and return control of the air force bases that it had operated in France since 1950 to the French by 1967. French President Charled De Gaulle continued his pursuit of an independent defence by removing France's Atlantic and Channel fleets from NATO command. In 1966, all French armed forces were removed from NATO's integrated military command, and all non-French NATO troops were asked to leave France. US Secretary of State Dean Rusk was later quoted as asking de Gaulle whether his order included "the bodies of American soldiers in France's cemeteries?" This withdrawal forced the relocation of SHAPE from Rocquencourt, near Paris, to Casteau, north of Mons, Belgium, by 16 October 1967. France remained a member of the alliance, and committed to the defence of Europe from possible Warsaw Pact attack with its own forces stationed in the Federal Republic of Germany throughout the Cold War. A series of secret accords between US and French officials, the Lemnitzer–Ailleret Agreements, detailed how French forces would dovetail back into NATO's command structure should East-West hostilities break out.

In 1982 the newly democratic Spain joined the alliance.

The Revolutions of 1989 and the dissolution of the Warsaw Pact in 1991 removed the de facto main adversary of NATO and caused a strategic re-evaluation of NATO's purpose, nature, tasks, and their focus on the continent of Europe. This shift started with the 1990 signing in Paris of the Treaty on Conventional Armed Forces in Europe between NATO and the Soviet Union, which mandated specific military reductions across the continent that continued after the dissolution of the Soviet Union in December 1991. At that time, European countries accounted for 34 percent of NATO's military spending; by 2012, this had fallen to 21 percent. NATO also began a gradual expansion to include newly autonomous Central and Eastern European nations, and extended its activities into political and humanitarian situations that had not formerly been NATO concerns.

The first post-Cold War expansion of NATO came with German reunification on 3 October 1990, when the former East Germany became part of the Federal Republic of Germany and the alliance. This had been agreed in the Two Plus Four Treaty earlier in the year. To secure Soviet approval of a united Germany remaining in NATO, it was agreed that foreign troops and nuclear weapons would not be stationed in the east. Whilst there was no formal commitment in the agreement not to expand NATO to the east, there are diverging views on whether negotiators gave informal commitments regarding further NATO expansion. Jack Matlock, American ambassador to the Soviet Union during its final years, said that the West gave a "clear commitment" not to expand, and declassified documents indicate that Soviet negotiators were given the impression that NATO membership was off the table for countries such as Czechoslovakia, Hungary, or Poland. Hans-Dietrich Genscher, the West German foreign minister at that time, said in a conversation with Eduard Shevardnadze that "[f]or us, however, one thing is certain: NATO will not expand to the east." In 1996, Gorbachev wrote in his Memoirs, that "during the negotiations on the unification of Germany they gave assurances that NATO would not extend its zone of operation to the east," and repeated this view in an interview in 2008. However in 2014 Gorbachev stated the opposite – that "The topic of 'NATO expansion' was not discussed at all [in 1990], and it wasn't brought up in those years. I say this with full responsibility. Western leaders didn't bring it up, either." According to Robert Zoellick, a State Department official involved in the Two Plus Four negotiating process, this appears to be a misperception, and no formal commitment regarding enlargement was made. Harvard University historian Mark Kramer also rejects that an informal agreement existed.

As part of post-Cold War restructuring, NATO's military structure was cut back and reorganized, with new forces such as the Headquarters Allied Command Europe Rapid Reaction Corps established. The changes brought about by the collapse of the Soviet Union on the military balance in Europe were recognized in the Adapted Conventional Armed Forces in Europe Treaty, which was signed in 1999. The policies of French President Nicolas Sarkozy resulted in a major reform of France's military position, culminating with the return to full membership on 4 April 2009, which also included France rejoining the NATO Military Command Structure, while maintaining an independent nuclear deterrent.

Between 1994 and 1997, wider forums for regional cooperation between NATO and its neighbors were set up, like the Partnership for Peace, the Mediterranean Dialogue initiative and the Euro-Atlantic Partnership Council. In 1998, the NATO–Russia Permanent Joint Council was established.

In 1997, NATO reached agreement on a significant downsizing of its command structure from 65 headquarters to 20. The NATO Response Force (NRF) was launched at the 2002 Prague summit on 21 November, the first summit in a former Comecon country. On 19 June 2003, a further restructuring of the NATO military commands began as the Headquarters of the Supreme Allied Commander, Atlantic were abolished and a new command, Allied Command Transformation (ACT), was established in Norfolk, United States, and the Supreme Headquarters Allied Powers Europe (SHAPE) became the Headquarters of Allied Command Operations (ACO). ACT is responsible for driving transformation (future capabilities) in NATO, whilst ACO is responsible for current operations. In March 2004, NATO's Baltic Air Policing began, which supported the sovereignty of Latvia, Lithuania and Estonia by providing jet fighters to react to any unwanted aerial intrusions. Eight multinational jet fighters are based in Lithuania, the number of which was increased from four in 2014.

Between 1999 and 2017 NATO incorporated the following Central and Eastern European countries, including several former communist states: the Czech Republic, Hungary, Poland, Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, Slovenia, Albania, Croatia and Montenegro.

In 2009 France announced its return to full participation in NATO.

The Russian intervention in Crimea in 2014 lead to strong condemnation by NATO nations and the creation of a new "spearhead" force of 5,000 troops at bases in Estonia, Lithuania, Latvia, Poland, Romania, and Bulgaria. At the subsequent 2014 Wales summit, the leaders of NATO's member states formally committed for the first time spend the equivalent of at least 2% of their gross domestic products on defence by 2024, which had previously been only an informal guideline.