The years immediately following the formation of Malaysia in May 1961, were an especially critical time in Brunei's political development. The key issues connected with the Malaysia proposal, namely the Brunei Revolt 1962, Brunei's refusal to join the Federation, Communist connections with the Party Rakyat Brunei (PRB), the claim to Limbang, foreign involvement in Brunei's internal politics and lastly, the British role in ensuring the survival of the Brunei Islamic State will be examined in depth. The main focus of this study is to trace the political development of Brunei from the announcement of the Malaysia Proposal in May 1961 by Tunku Abdul Rahman up to the abdication of Sultan Sir Omar Ali Saifuddien III in 1967. As background, the thesis also examines the proclamation of the Brunei Constitution in 1959. However, the implementation of the Constitution did not give sufficient power for the people to voice their opinions in the affitirs of the state. This led to the formation of a left-wing political party known as the Brunei People's Party or Party Rakyat Brunei in 1956. The PRB subsequently opposed any policies introduced by the government and demanded the introduction of full democracy in the state. This was the beginning of conflict between the people and the government in modem Brunei political history. The conflict intensified in 1961 when Tunku Abdul Rahman proclaimed the Federation of Malaysia comprising II Malayan States, Singapore, Sarawak, North Borneo and Brunei. The issue of whether or not to join the Federation posed a dilemma for Brunei. The situation worsened when the Sultan announced his decision to support the concept of Malaysia in principle in December 1961, whereas most of his subjects were opposed to it. As a result, a revolt broke out on 8th December 1962 led by the PRB. However, after the revolt the Sultan refused to join Malaysia, which resulted in him raising the claim to Limbang. In the meantime, the internal political conflict in Brunei intensified and led to the involvement of Malaysia, the Philippines, Indonesia, the United Kingdom and Communist elements. The conflict spread beyond Brunei's borders and resulted in its involvement in the Malaysia- Indonesia Confrontation in 1963-1966. At the same time, the British also tried to push Brunei into the Federation of Malaysia between 1963-1966 in order to hasten its independence and to ensure the survival of the Sultanate. However, the Sultan was not interested in this idea and preferred to stay out of the Federation. Eventually, Sultan Omar Ali Saifaddien, who depended on the British for the survival of his Malay Islamic Monarchy, abdicated from the throne in 1967 in favour of his son, Sultan Hassanal Bolkiah Muzzaddien Waddaullah. Therefore, the concept of Malaysia and its formation had influenced the internal and external political development of Brunei in the period 1961-1967. Ultimately, however, Brunei has been able to sustain and maintain itself as a Malay Islamic Sultanate to the present day.