The Austro-Hungarian Compromise of 1867 (German: Ausgleich, Hungarian: Kiegyezés) established the dual monarchy of Austria-Hungary. It was signed by Emperor Franz Joseph I of Austria and a Hungarian delegation led by Ferenc Deák. The compromise followed a series of failed constitutional reforms of the Habsburg Empire.
The compromise was the result of the 1866 Battle of Königgrätz which was a part of the Austro-Prussian War. This war defined the next leading power of German-speaking Europe. Prussia was the victor, leaving Austria to look to the southeast for new power, resulting in the "compromise" treaty with Hungary.
This created a disjointed government between the two countries, in which they shared a finance ministry and foreign ministry but maintained separate prime ministers, parliament, and military. Three militaries existed between them and officers had to be trained to speak many languages such as German, Czech, Polish, and Hungarian.
The Hungarian nobles wanted and got the Emperor's coronation as King of Hungary. A separate parliament at Budapest was created. It could make laws for the lands of the Hungarian crown.