The IEBL essentially runs along the military front lines as they were at the end of the Bosnian war with some major adjustments (most importantly in the western part of the country, and in and around Sarajevo), made at the Dayton peace conference.
The present political divisions of Bosnia and Herzegovina were agreed upon as part the constitution that makes up Annex 4 of the General Framework Agreement for Peace concluded at the Dayton peace conference in November 1995, and subsequently signed in Paris on December 14, 1995. A key component of this was the delineation of the Inter-Entity Boundary Line, to which many of the tasks listed in the other Annexes referred. In particular the IEBL affected the tasks of the Military Annexes; such as the initial (immediate) Separation of Forces, the creation of an initial Zone of Separation, the Transfer of Areas between the Entities and the Removal of Forces to containment areas.
Dayton marked the first occasion when three-dimensional satellite image technology and digital cartography was used to determine and delineate boundaries in an official treaty. Due to the speed and intensity of the negotiations (especially towards the end), a series of Inter-Entity Boundary Line commissions still needed to be held over the first 6 months of the NATO-led Implementation Force IFOR operation to iron out the remaining details of some of the boundaries (especially within Sarajevo). Over 40 changes to the Inter-Entity Boundary Line were negotiated by the parties in meetings facilitated by the Chief of Staff HQ ARRC, Major General Michael Wilcox. These were signed off by IFOR Commander Admiral Leighton W. Smith, Jr. in July 1996.
Today the IEBL between Republika Srpska and the Federation of Bosnia and Herzegovina is no longer controlled by the military and is not policed. There are no border controls, and crossing the IEBL is akin to crossing a U.S. state or Schengen state boundary.
The Constitutional Court of Bosnia and Herzegovina has, in its first partial decision number U 5/98, ruled on the issue whether the Constitution of the RS can use the word "border" instead of the "boundary" in its text. The Court declared:
Thus, the Constitution of the RS had to be amended, which was done with the Amendment number LXVIII, which changed the word "border" in the Amendment number LV on the Article 2 paragraph 2 of the Constitution of RS.
At the time of the creation of the Dayton Accord, Brcko was also divided between FBiH and RS; but lately, the city was re-consolidated in the entity-neutral Brčko District, in a way to connect Tuzla to Posavina cantons in FBiH and Pelagićevo and Donji Žabar to Lopare and Bijeljina in RS.