The new state was characterized by problems with its ethnic diversity, the separate histories of the Czech and Slovak peoples and their greatly differing religious, cultural, and social traditions. The Germans and Magyars (Hungarians) of Czechoslovakia openly agitated against the territorial settlements. Nevertheless, the new republic saw the passage of a number of progressive reforms in areas such as housing, social security, and workers’ rights.

The Czechoslovak state was conceived as a parliamentary democracy. The constitution identified the "Czechoslovak nation" as the creator and principal constituent of the Czechoslovak state and established Czech and Slovak as official languages. The concept of the Czechoslovak nation was necessary in order to justify the establishment of Czechoslovakia before the world, otherwise the statistical majority of the Czechs as compared to Germans would be rather weak.

The operation of the new Czechoslovak government was distinguished by its political stability. Largely responsible for this were the well-organized political parties that emerged as the real centers of power. After 1933, Czechoslovakia remained the only functioning democracy in Central Europe. Under pressure from its Sudeten German minority, supported by neighbouring Nazi Germany, Czechoslovakia was forced to cede its Sudetenland region to Germany on 1 October 1938 as part of the Munich Agreement. It also ceded southern parts of Slovakia and Subcarpathian Ruthenia to Hungary and the Zaolzie region in Silesia to Poland. This, in effect, ended the First Czechoslovak Republic. It was replaced by Second Czechoslovak Republic, which lasted less than half a year before Germany occupied the rest of Czechoslovakia in March 1939.