Celtic tribes arrived on the island between 600 and 150 B.C. Invasions by Norsemen that began in the late 8th century were finally ended when King Brian BORU defeated the Danes in 1014. Norman invasions began in the 12th century and set off more than seven centuries of Anglo-Irish struggle marked by fierce rebellions and harsh repressions. The Irish famine of the mid-19th century was responsible for a drop in the island's population by more than one quarter through starvation, disease, and emigration. For more than a century afterward, the population of the island continued to fall only to begin growing again in the 1960s. Over the last 50 years, Ireland's high birthrate has made it demographically one of the youngest populations in the EU.

The modern Irish state traces its origins to the failed 1916 Easter Monday Uprising that touched off several years of guerrilla warfare resulting in independence from the UK in 1921 for 26 southern counties; six northern (Ulster) counties remained part of the UK. Deep sectarian divides between the Catholic and Protestant populations and systemic discrimination in Northern Ireland erupted into years of violence known as the "Troubles" that began in the 1960s. The Government of Ireland was part of a process along with the UK and US Governments that helped broker the Good Friday Agreement in Northern Ireland in 1998. This initiated a new phase of cooperation between the Irish and British Governments. Ireland was neutral in World War II and continues its policy of military neutrality. Ireland joined the European Community in 1973 and the euro-zone currency union in 1999. The economic boom years of the Celtic Tiger (1995-2007) saw rapid economic growth, which came to an abrupt end in 2008 with the meltdown of the Irish banking system. Today the economy is recovering, fueled by large and growing foreign direct investment, especially from US multi-nationals.

Ireland is a small, modern, trade-dependent economy. It was among the initial group of 12 EU nations that began circulating the euro on 1 January 2002. GDP growth averaged 6% in 1995-2007, but economic activity dropped sharply during the world financial crisis and the subsequent collapse of its domestic property market and construction industry during 2008-11. Faced with sharply reduced revenues and a burgeoning budget deficit from efforts to stabilize its fragile banking sector, the Irish Government introduced the first in a series of draconian budgets in 2009. These measures were not sufficient to stabilize Ireland’s public finances. In 2010, the budget deficit reached 32.4% of GDP - the world's largest deficit, as a percentage of GDP. In late 2010, the former COWEN government agreed to a $92 billion loan package from the EU and IMF to help Dublin recapitalize Ireland’s banking sector and avoid defaulting on its sovereign debt. In March 2011, the KENNY government intensified austerity measures to meet the deficit targets under Ireland's EU-IMF bailout program.

In late 2013, Ireland formally exited its EU-IMF bailout program, benefiting from its strict adherence to deficit-reduction targets and success in refinancing a large amount of banking-related debt. In 2014, the economy rapidly picked up. In late 2014, the government introduced a fiscally neutral budget, marking the end of the austerity program. Continued growth of tax receipts has allowed the government to lower some taxes and increase public spending while keeping to its deficit-reduction targets. In 2015, GDP growth exceeded 26%. The magnitude of the increase reflected one-off statistical revisions, multinational corporate restructurings in intellectual property, and the aircraft leasing sector, rather than real gains in the domestic economy, which was still growing. Growth moderated to around 4.1% in 2017, but the recovering economy assisted lowering the deficit to 0.6% of GDP.

In the wake of the collapse of the construction sector and the downturn in consumer spending and business investment during the 2008-11 economic crisis, the export sector, dominated by foreign multinationals, has become an even more important component of Ireland's economy. Ireland’s low corporation tax of 12.5% and a talented pool of high-tech laborers have been some of the key factors in encouraging business investment. Loose tax residency requirements made Ireland a common destination for international firms seeking to pay less tax or, in the case of U.S. multinationals, defer taxation owed to the United States. In 2014, amid growing international pressure, the Irish government announced it would phase in more stringent tax laws, effectively closing a commonly used loophole. The Irish economy continued to grow in 2017 and is forecast to do so through 2019, supported by a strong export sector, robust job growth, and low inflation, to the point that the Government must now address concerns about overheating and potential loss of competitiveness. The greatest risks to the economy are the UK’s scheduled departure from the European Union ("Brexit") in March 2019, possible changes to international taxation policies that could affect Ireland’s revenues, and global trade pressures.