The Austro-Hungarian Compromise of 1867 was an agreement that transformed the Austrian Empire into a dual monarchy known as the Austro-Hungarian Empire. This compromise established a separate Hungarian government and allowed Hungary to have its own parliament, while both regions shared a common monarch, Franz Joseph I, and coordinated foreign and military policies. The compromise aimed to address rising nationalist sentiments and internal tensions within the empire. It granted greater autonomy to Hungary, which had been seeking more control over its affairs, while maintaining the unity of the empire, thus balancing the interests of various ethnic groups within the diverse population.