In 1815 a new federal pact came into effect, by which the cantons regained their sovereignty and, in general, returned to oligarchic rule. However, liberalism had many followers and several cantons adopted liberal constitutions. The liberals favored a powerful, unified state and social and economic reforms. Opposition to them was led by the Jesuit religious order. As liberal ideas spread to a majority of cantons, the Catholic cantons formed a defensive pact, the Sonderbund .

Civil war broke out in 1847. In less than a month, the liberals were victorious, and the Jesuits were soon expelled. A new constitution (1848) organized Switzerland as a federal republic.

The second half of the 19th century was a period of peace, internal and external. Several cantons revised their constitutions to allow voters to initiate legislation. The federal constitution was also modified (1874) to enlarge the powers of the federal government. During this period manufacturing developed rapidly and replaced agriculture as the primary occupation of the Swiss people.

Switzerland also established itself as a neutral country in international conflicts. Mercenary service in foreign armies was prohibited, although the Swiss Guards were allowed to continue as the pope's personal bodyguard.

Switzerland's neutral status during World War I made it a shelter for foreign refugees. Many of them brought socialist ideas and were influential in organizing an industrial workers' movement. In 1918 a general strike caused the government to institute reforms improving working conditions and to introduce a new system of proportional representation for electing the National Council.

After World War I, Switzerland joined the League of Nations and was active in its humanitarian programs. Following World War II Switzerland cooperated with, but did not join, the United Nations. Switzerland helped found the European Free Trade Association (EFTA) in 1960 and joined the Council of Europe in 1963. In 1986 the Swiss government issued a proposal that Switzerland join the United Nations, but it was turned down by Swiss voters. In 1997, after years of rejecting membership in most international bodies (including the European Union), the Swiss approved joining the Partnership for Peace, an organization affiliated with the North Atlantic Treaty Organization.

Because of Switzerland's neutrality, it has become the site of numerous international agencies and conferences. The International Red Cross, for instance, was founded in Geneva. In the late 1990's, however, Switzerland's neutrality, a source of great pride for the Swiss people, was called into question when it was revealed that Switzerland had helped Germany profit from looted gold and other assets, including gold taken from victims of the Holocaust.

In 2002, Switzerland joined the United Nations.