At the end of World War I, the forces of the German Empire had mostly disintegrated, the men making their way home individually or in small groups. Many of them joined the Freikorps ("Free Corps"), a collection of volunteer paramilitary units that were involved in revolution and border clashes between 1918 and 1923.
The newly-formed Weimar Republic did need a military though, and on 6 March 1919 a decree established the Vorläufige Reichswehr ("Provisional National Defence"), consisting of a Vorläufige Reichsheer ("Provisional National Army") and a Vorläufige Reichsmarine ("Provisional National Navy"). About 400,000 men served in the Reichsheer.
On 30 September 1919, the army was reorganized as the Übergangsheer ("Transitional Army"). This lasted until 1 January 1921, when the Reichswehr was officially established according to the limitations imposed by the Treaty of Versailles.
Limited by treaty to a total of 100,000 men, the Reichswehr was composed of the following:
Tanks, heavy artillery and aircraft were forbidden.
Despite the limitations on its size, their analysis of the loss of World War I, research and development, secret testing abroad (in cooperation with the Red Army) and planning for "better times" went on. As well, although forbidden to have a general staff, the army continued to conduct the typical functions of a general staff under the disguised name of Truppenamt, or "Troop Office". During this time, many of the future leaders of the Wehrmacht, for instance, Heinz Guderian, first formulated the ideas that they were to use so effectively a few years later.
The Reichswehr was never a friend of democracy but stayed loyal to the democratic German government. The apolitical character of the Reichswehr was emphasised, and this gave democracy the chance to develop without intervention from the military leadership. The biggest influence on the development of the Reichswehr was Hans von Seeckt (1866-1936), who served from 1920-1926 as Chef der Heeresleitung (literally "Chief of the Army Leadership").
Whilst the reduction of the peacetime strength of the German army from 780,000 (1913) to 100,000 actually enhanced the quality of the Reichswehr (only the best of the best would be permitted to join the army) the changing face of warfare meant that the smaller Rechswehr was largely helpless without mechanised and aerial support, no matter how much effort was put into modernising infantry tactics.
During 1933 and 1934, after Adolf Hitler became Chancellor of Germany, the Reichswehr began a secret programme of expansion. With the Nazi takeover of power, there were suggestions by Ernst Rohm that the SA, the Nazi paramilitary force, take over the functions of the Reichswehr. This alarmed the leaders of the military, and to forestall the possibility of a coup, Hitler sided with the military and killed Rohm and his supporters in the Night of the Long Knives. The secret programme of expansion, finally became public with the formal announcement of the Wehrmacht in 1935.