Following the end of the war, and the signing of the Dayton Peace Agreement in 1995, it was transformed into the Army of the Federation of Bosnia and Herzegovina.

The Patriotic League (PL) and the local Territorial Defence Force of the Republic of Bosnia and Herzegovina (TORBiH) were the official army while paramilitaries such as the Zelene Beretke (Green Berets) and Crni Labudovi (Black Swans) units were also active.

It is widely believed that this was due to the 1991 Milošević–Tuđman Karađorđevo meeting where presidents Slobodan Milošević and Franjo Tuđman discussed partitioning Bosnia between Croatia and Serbia.

After a short but bloody war, and once Croats realized that their partnership with Serbs would not bring them any territorial gains, they agreed to the U.S. leadership's "Washington Treaty" peace agreement.

A renewed alliance between the HVO and the ARBiH was agreed upon, with the objective of forming a strong force that could fight the much stronger and better equipped VRS.

Following the Split Agreement, the Croatian Army, with cooperation from the ARBiH and the HVO, launched a series of operations: Flash,[clarification needed] Summer '95, Storm and Mistral 2.

[citation needed] Following the second Markale massacre, a NATO intervention was launched, which destroyed much of the VRS' infrastructure in just a few days through Operation Deliberate Force.

The Political leadership in Sarajevo had met in Mehurici to decide alternatives if Slovenia and Croatia should follow their stated plans to declare independence.

As Bosnia declared independence the "territorial defense" was established as the state's official army and the patriotic league integrated a month later.

In 1993, most brigades were renamed as Mountain troops given that the lack of heavy weapons made it organizationally pointless to list them as infantry or motorized.