The federation was established in order to facilitate the future transfer of the Shan principalities to the Governor of Burma.

Unaware of the implications of the British political move, the Shan Saophas lost power in the process and had to contribute 50% of their revenue to the central fund as well.

[3] On 27 May 1942, during World War II, Kengtung State was invaded and its capital captured by the Imperial Japanese Army.

[5] Following the existing agreement between Thai Prime Minister Plaek Phibunsongkhram (Phibun) and the Japanese Empire, on 18 August 1943, the Japanese government agreed to the Thai annexation of Kengtung and part of Mongpan state (as well as the annexation of Kelantan, Trengganu, Kedah, Perlis states and nearby islands in Malaya.

Following the 1962 Burmese coup d'état, the status of the Shan States and the saophas' hereditary rights were removed by Gen. Ne Win's military government.