Although performing a vastly different function, the Commonwealth is the successor of the British Empire. In 1884, whilst visiting Adelaide, South Australia, Lord Rosebery described the changing British Empire, as some of its colonies became more independent, as a "Commonwealth of Nations".

Independence within the Empire
Conferences of British and colonial Prime Ministers had occurred periodically since 1887, leading to the creation of the Imperial Conferences in the late 1920s.[2] The formal organisation of the Commonwealth developed from the Imperial Conferences, where the independence of the self-governing colonies and especially of dominions was recognised, particularly in the Balfour Declaration at the Imperial Conference in 1926, when Britain and its dominions agreed they were "equal in status, in no way subordinate one to another in any aspect of their domestic or external affairs, though united by common allegiance to the Crown, and freely associated as members of the British Commonwealth of Nations". This relationship was eventually formalised by the Statute of Westminster in 1931.

Remaining members gain independence
After World War II, the Empire was gradually dismantled, partly owing to the rise of independence movements in the then-subject territories (such as that started in India under the influence of of Mahatma Gandhi, Jawaharlal Nehru, Mohammed Ali Jinnah and Subhash Chandra Bose), and partly owing to the British Government's strained circumstances resulting from the cost of the war. The word "British" was dropped in 1949 from the title of the Commonwealth to reflect the changing position.[3] Myanmar (formerly Burma, 1948), and Aden (1967) are the only former colonies not to have joined the Commonwealth upon independence. Among the former protectorates and mandates, Egypt (independent in 1922), Iraq (1932), Jordan (1946), Israel (1948), Sudan (1956), Kuwait (1961), Bahrain (1971), Oman (1971), Qatar (1971), and the United Arab Emirates (1971) never became members of the Commonwealth. The Republic of Ireland left the Commonwealth upon becoming a republic in 1949. However, the Ireland Act 1949 passed by the Parliament of Westminster gave citizens of the Republic of Ireland a status similar to that of other citizens of the Commonwealth in UK law.

Members not under the House of Windsor
The issue of countries with constitutional structures that did not operate based on the shared Crown, but who wished to remain members of the Commonwealth, was resolved in April 1949 at a Commonwealth prime ministers' meeting in London. India agreed that when it became a republic in January 1950 it would accept the King as "symbol of the free association of its independent member nations and as such Head of the Commonwealth". The other Commonwealth countries in turn recognised India's continuing membership of the association. (At Pakistan’s insistence, India was not regarded as an exceptional case and it was assumed that other states would be accorded the same treatment as India.) The London Declaration is often seen as marking the beginning of the modern Commonwealth, and following India's precedent, other nations moved to become republics, or constitutional monarchies under a different Royal House.

Old, New and White Commonwealth
As the Commonwealth grew, Britain and pre-1945 Dominions (a term formally dropped in the 1940s) became informally known as the "Old Commonwealth", particularly since the 1960s when some of them disagreed with poorer, African and Asian (or New Commonwealth) members about various issues at Commonwealth Heads of Government meetings. Accusations that the old, "White" Commonwealth had different interests from African Commonwealth nations in particular, and charges of racism and colonialism arose during heated debates about Rhodesia in the 1960s and 1970s, the imposition of sanctions against apartheid-era South Africa in the 1980s and, more recently, about whether to press for democratic reforms in Nigeria and then Zimbabwe. The term New Commonwealth is also used in the United Kingdom (especially in the 1960s and 1970s) to refer to recently decolonised countries, which are predominantly non-white and underdeveloped. It was often used in debates about immigration from these countries.

In recent years, the term "White Commonwealth" has been used in a derogatory sense to imply that the wealthier, white nations of the Commonwealth had different interests and goals from the non-white, and particularly the African members. Zimbabwean President Robert Mugabe has used the term frequently to allege that the Commonwealth's attempts to catalyse political changes in his country is motivated by racism and colonialist attitudes and that the White Commonwealth dominates the Commonwealth of Nations as a whole.

There have been attempts made by groups such as the United Commonwealth Society to unite the commonwealth and provide closer ties both culturally and economically, starting with the "White Commonwealth" and expanding to include other nations within the commonwealth generally.