During World War II the country was occupied by the Germans. When they retreated in 1944, a leader of the Communist-led resistance movement, Enver Hoxha, became head of the Albanian government. In 1946 a people's republic was declared; private land was confiscated and industry nationalized. After the war Yugoslavia controlled Albania. When Yugoslavia left the Soviet bloc in 1948, Albania broke its ties with that country and became an ally of the Soviet Union, joining the Warsaw Pact in 1955. Albania broke with the Soviet Union and became an ally of China in 1961; these ties to China were severed in 1978 but were renewed in 1991.

At his death in 1985 Hoxha was the longest-serving head of a Communist country. Under his successor, Ramiz Alia, Albania slowly emerged from the isolation that had marked the Hoxha era. Diplomatic relations were established with many countries, and Albania began to take an active role in Balkan affairs. In December 1990 the Democratic party was established, and in March 1991 the first multiparty elections in 68 years were held. A non-Communist multiparty regime took control in June 1991, but this regime fell in December 1991.

Thousands of Albanian refugees fled to Italy in August 1991, but few were allowed to remain there. In April 1992 Sali Berisha, a heart surgeon, was elected Albania's first non-Communist president since World War II.