However, not all people in Northern Ireland supported O'Neill. Many Unionists had grave reservations about the Republic of Ireland. In particular, they objected to (1) articles 2 and 3 of the Irish constitution which claimed jurisdiction over the whole island (2) the Irish constitution's declaration of the 'special position' of the Catholic church and (3) the Catholic church's policies, such as banning members who married Protestants from bringing up their children as Protestants. Many felt that a Northern Ireland Prime Minister should not associate with the Irish government. They were also suspicious of the decline in the numbers of Protestants in the Republic, although this has since been shown to be a result of social factors, rather than 'Popification'.

In 1966, a Unionist named Ian Paisley, who had also founded the Free Presbyterian Church, set up the Protestant Unionist Party and began to strongly oppose O'Neill. When the 50th anniversary of the Easter Rising passed in 1966, sectarian tensions rose further. When the Irish Taoiseach, now Jack Lynch, met O'Neill in 1967, Paisley's supporters held mass demonstrations branding O'Neill the 'Ally of Popery' and demanding that he 'keep Ulster Protestant'. This caused sectarian tensions in Northern Ireland to rise even more and the relationship with the Republic deteriorated as a result. At the same time, some Catholics in the west of Northern Ireland criticised O'Neill for siting the new University of Ulster in Coleraine instead of Derry, the 2nd largest city. As part of a UK-wide "new town" scheme, O'Neill also founded a new town and named it Craigavon, after the first Unionist Prime Minister of Northern Ireland. This name did not go down well in some quarters and criticism began to mount up. The town of Craigavon was designed to ease population pressure on Belfast. It was supposed to merge Lurgan and Portadown into a single town. However, it was a failure and today large areas of the new town lie derelict and crime-ridden.

In 1967, the Northern Ireland Civil Rights Association was set up. Its members were drawn from both communities, although mainly from Nationalist Catholics who were more at a disadvantage under the Stormont government. The NICRA's demands were for a fair voting system ('one man one vote'), an end to gerrymandering, and end to religious discrimination, disbandment of the B-Specials and general equality for all the people of Northern Ireland. As the first Civil Rights marches took place in August 1968, Stormont began banning them because they were illegal (i.e. the police had not been notified of the intention to march). The marchers ignored the ban and, on various marches, were attacked and beaten by the police with battons. Stormont received condemnation from around the world. Eventually O'Neill relented and agreed to some of the demands. The NICRA then called off its campaign.

However, another group of people refused to accept the concessions, saying they were too little. Stormont had still not introduced 'one man one vote'. Led by Northern Ireland students, such as Bernadette Devlin (today Bernadette McAliskey) the People's Democracy movement ignored pleas for calm from the NICRA and organised a march from Derry to Belfast for January 1969. Near Derry, at the crossing over the river Burntollet, it was ambushed by loyalists and some off-duty policemen and B-specials. The marchers were stoned and beaten and the on-duty police did not make much effort to stop them. O'Neill was appalled by the scenes and announced an inquiry, despite opposition from his own party. O'Neill's Deputy Prime Minister resigned in protest saying the inquiry could only make matters worse. Soon the tensions had risen so much that the NICRA recommenced their Civil Rights marches.

In February 1969 a general election was called in Northern Ireland. Although O'Neill's party won most votes they no longer had enough to form a strong government. O'Neill then decided to introduce 'one man one vote' for the next election, but this caused so much chaos and anger from his own party that he was forced to resign. The new Prime Minister was James Chichester-Clark. Meanwhile Civil Rights marches began to get violent, fuelled by the anger at the violence that had met their earlier marches. As marchers clashed with police and loyalists, riots sprang up. In the summer of 1969 Clark called in the B-specials to help the police keep order. However, this only increased Catholic resentment and the situation began to get out of control.