The Dual Alliance was established through the signing of the 'Twofold Covenant' between Germany and Austria-Hungary. This significant political and military agreement was formalized on October 7, 1879, in the context of escalating tensions in Europe, particularly with Russia's growing influence. The alliance represented a strategic move by both nations to fortify their positions against Russian expansionism and to foster closer bilateral ties. The signing ceremony, which took place in Vienna, set forth the terms of mutual defense, requiring each signatory to assist the other in the event of an attack from Russia or its allies.

Otto von Bismarck, the German Chancellor, played a pivotal role in the creation of the Dual Alliance, carefully engineering it as part of his broader strategy of isolating France and ensuring the stability of Germany. By aligning with Austria-Hungary, Bismarck sought to mitigate the risks posed by a perceived encirclement by hostile powers. The agreement's military clauses obliged both nations to mobilize support, thus transforming diplomatic efforts into a more binding commitment, signaling to other European nations the seriousness of their alliance.

The establishment of the Dual Alliance also paved the way for future agreements, including the Triple Alliance with Italy in 1882, which further solidified the Central Powers against adversarial coalitions. By creating a collective security arrangement, Germany and Austria-Hungary aimed to deter potential aggressors, while also reinforcing their diplomatic stature on the global stage. This alliance was instrumental in shaping the complex web of alliances that characterized European politics leading up to World War I, marking a pivotal point in the continent's geopolitical landscape.