In 1961 Carlos Fonseca Amador, Silvio Mayorga, and Tomás Borge Martínez formed the FSLN (Sandinista National Liberation Front) with other student activists at the Universidad Nacional Autonoma de Nicaragua (UNAN) in Managua. For the founding members of the FSLN, this was not their first experience with political activism. Amador, first General Secretary of the organization, had worked with others on a newspaper "broadly critical" of the Somoza reign titled Segovia.
In the 1970s the FSLN began a campaign of kidnappings which led to national recognition of the group in the Nicaraguan media and solidification of the group as a force in opposition to the Somoza Regime.
The Somoza Regime, which included the Nicaraguan National Guard, a force highly trained by the U.S. military, declared a state of siege, and proceeded to use torture, extra-judicial killings, intimidation and censorship of the press in order to combat the FSLN attacks. This led to international condemnation of the regime and in 1978 the administration of U.S. president Jimmy Carter cut off aid to the Somoza regime due to its human rights violations (Boland Amendment). In response, Somoza lifted the state of siege in order to continue receiving aid.
On 10 January 1978, the editor of the Managua newspaper La Prensa, and founder of the Union for Democratic Liberation (UDEL), Pedro Joaquín Chamorro Cardenal was murdered by suspected elements of the Somoza regime, and riots broke out in the capital city, Managua, targeting the Somoza regime.
Following the riots, a general strike on 23–24 January called for the end of the Somoza regime and was, according to the U.S. State Department staff at the U.S. Embassy, successful at shutting down around 80% of businesses in not only Managua but also the provincial capitals of León, Granada, Chinandega, and Matagalpa.
On 22 August 1978 the FSLN staged a massive kidnapping operation. Led by Éden Pastora, the Sandinistan forces captured the National Palace while the legislature was in session, taking 2,000 hostages. Pastora demanded money, the release of Sandinistan prisoners, and, "a means of publicizing the Sandinista cause."After two days, the government agreed to pay $500,000 and to release certain prisoners, marking a major victory for the FSLN.
In early 1979 the Organization of American States supervised negotiations between the FSLN and the government. However, these broke down when it became clear that the Somoza regime had no intention of allowing democratic elections to take place.
By June 1979 the FSLN controlled all of the country except the capital.
on 17 July President Somoza resigned and the FSLN entered Managua, giving full control of the government to the revolutionary movements.
Upon taking office in January 1981, Ronald Reagan cancelled the dispersal of economic aid to Nicaragua.
and on 6 August 1981 he signed National Security Decision Directive number 7, which authorized the production and shipment of arms to the region but not their deployment.
On 17 November 1981, President Reagan signed National Security Directive 17, authorizing covert support to anti-Sandinista forces.
By 1982 Contra forces had begun carrying out assassinations of members of the Nicaraguan government.
By 1983 the Contras had launched a major offensive and the CIA was helping them to plant mines in Nicaragua's harbors to prevent foreign weapons shipments from arriving.
The 1984 election took place on 4 November. Of the 1,551,597 citizens registered in July, 1,170,142 voted (75.41%). The null votes were 6% of the total. International observers declared the elections free and fair, despite the Reagan administration denouncing it as a "Soviet style sham".
The Esquipulas Peace Agreement was an initiative in the mid-1980s to settle the military conflicts that had plagued Central America for many years, and in some cases (notably Guatemala) for decades. In May 1986, a summit meeting, "Esquipulas I," took place, attended by the five Central American presidents.
The 1987 Iran–Contra affair placed the Reagan Administration again at the center of secret support for the Contras.
On 15 February 1987, Costa Rican President Óscar Arias submitted a Peace Plan which evolved from this meeting.
During 1986 and 1987, the "Esquipulas Process" was established, in which the Central American heads of state agreed on economic cooperation and a framework for peaceful conflict resolution. The "Esquipulas II Accord" emerged from this and was signed in Guatemala City by the five presidents on 7 August 1987.