However it was not going to be that simple - those who had been outvoted in the Dail were not prepared to simply accept the rule of a Dail which had supported what they regarded as a 'treacherous' treaty. In April 1922, the anti-treaty IRA seized control of the Dublin Four-Courts and other key buildings. The situation grew very tense as the new Irish government tried to mediate with the IRA. However, the government quickly lost its patience and in June Michael Collins ordered the Irish Army to shell the Four-Courts. He succeeded in driving the IRA out of Dublin but had also triggered the Irish Civil War. The fire which the Irish Army started in the Four-Courts destroyed many priceless historic documents, including all of Ireland's accumulated census data. This makes the job of genealogists today much more difficult.

The war went on for almost a year, and was particularly intensive in Connaught and Munster. It was basically a guerilla war, involving sniper attacks, ambushes and raids. Slowly but surely the Army drove the IRA into the mountains and, as the fighting continued to disrupt local life, the IRA lost the support of the locals on which it relied. Therefore the IRA finally called a halt to its campaign in April 1923. Among the casualties of the Civil War was Michael Collins, who was shot dead in an ambush in his native county Cork. Arthur Griffith, the Prime Minister of the Free State, died of natural causes during the war.

Meanwhile in Northern Ireland the situation had scarcely been better. During 1920 and 1921, the IRA made frequent incursions over the border into Northern Ireland. They often attacked the local Protestants and on one occasion managed to occupy 40 square miles of county Fermanagh for a week. Within Northern Ireland many Protestants scapegoated Catholics for the IRA violence and the expulsion of Protestants from their homes in the Free State. This resulted in a dramatic rise in sectarian violence and rioting, particularly in Belfast, although IRA violence was reduced once the Civil War began in 1922. Between July 1920 and July 1922, 257 Catholics and 157 Protestants were murdered in sectarian attacks in Northern Ireland. About 11,000 Catholics were forced to leave their jobs in Belfast's factories due to attacks from Protestant colleagues. The Northern Ireland government responded by setting up a second police force, called the "Special B Constabulary" (popularly known as the B-Specials), to try to maintain order. However this force was not regarded as impartial and this simply intensified the violence. The Special Powers Act (1922) and the Offences Against the State Act (1924) gave the police unprecedented powers to intern people without a trial.

The main problem for the Northern Ireland government was the large (30%) Nationalist minority in the state. 25 local councils were Nationalist controlled when the state was formed and, in fact, Tyrone and Fermanagh councils were dissolved when they declared that they would be answerable to the Dublin Parliament and not the Northern Ireland Parliament. The government decided to stabilise the province by increasing Unionist control of councils. So they abolished Proportional Representation and replaced it with a 'First past the post' electoral system. They also strategically redrew constituency boundaries to ensure that Nationalists were at a disadvantage ('gerrymandering'). Also, richer people were given more votes, depending on how much land they owned. All these measures ensured that the number of Unionist MPs dramatically increased in the first few years of Northern Ireland's history, and the level of political upheaval was dramatically reduced.

In December 1925 the Boundary commission results were complete. It proposed giving chunks of south and west Fermanagh, west Tyrone and south Armagh to the Free State and a piece of the Free State west of Derry City to Northern Ireland. However, fearing violence, the report was kept away from the public and the changes were never implemented.

In the mid 1920s, a new building in Dundonald, east of Belfast, was built for the Northern Ireland government. Constructed near Stormont Castle it was known as 'Parliament Buildings' and, from then on, the Northern Ireland Parliament was referred to by the nickname 'Stormont'.