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The name "Malaysia" was adopted in 1963 when the Federation of Malaya (Malay: Persekutuan Tanah Melayu), Singapore, Sabah and Sarawak formed a 14-state federation. Singapore was expelled from Malaysia in 1965 to become an independent country.

Although politically dominated by the Malays, modern Malaysian society is heterogeneous, with substantial Chinese and Indian minorities. Malaysian politics have been noted for their allegedly communal nature; the three major component parties of the Barisan Nasional each restrict membership to those of one ethnic group. The only major violence the country has seen since independence was the May 13 racial riots in the wake of an election campaign based on racial issues. Nonetheless, Malaysia is considered to be a model of racial harmony.

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During the late 19th century, many Malay states decided to obtain British help in settling their internal conflicts. The commercial importance of tin mining in the Malay states to merchants in the Straits Settlements led to British government intervention in the tin-producing states in the Malay Peninsula. British gunboat diplomacy was employed to bring about a peaceful resolution to civil disturbances caused by Chinese gangsters, and the Pangkor Treaty of 1874 paved the way for the expansion of British influence in Malaya. By the turn of the 20th century the states of Pahang, Selangor, Perak, and Negeri Sembilan, known together as the Federated Malay States (not to be confused with the Federation of Malaya), were under the de facto control of British Residents appointed to advise the Malay rulers. The British were "advisers" by name but in reality they were the puppet masters behind the Malay rulers.

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