Palau became independent under its Compact of Free Association with the United States in 1994.
The decisive date was 1 October 1994, when the Compact entered into force and Palau’s transition from the United States–administered Trust Territory of the Pacific Islands ended. Palau became the last district of that trust territory to achieve independence.
The path to independence was gradual. Palau rejected joining the Federated States of Micronesia in a 1978 referendum, adopted a constitution, and became the Republic of Palau in 1981. It signed the Compact with the United States in 1982, but implementation was delayed by constitutional disputes, especially over provisions concerning nuclear materials and weapons.
Under the Compact, Palau is a sovereign country in free association with the United States rather than a U.S. territory. The agreement provides defense responsibilities and economic assistance, while Palau retains its own government, citizenship, and international identity.