During the 1970s the population suffered from increased landlessness, poverty, unemployment and overpopulation. Political parties became polarized and fought for power largely through coups and electoral fraud. In 1972, the military arrested and exiled the elected president and installed their own candidate in power. Guerrilla activity increased, and the government responded by unleashing 'death squads' who murdered, tortured or kidnapped thousands of Salvadorans. In 1979, a junta of military and civilians overthrew the president and promised reforms. When these reforms were not met, opposition parties banded together under the party name Federación Democrático Revolucionario, of which the FMLN was the largest group. The successful revolution in Nicaragua in 1979 encouraged many Salvadorans to believe that armed struggle was the only way to secure reforms. When popular archbishop Oscar Romero was assassinated saying mass in 1980, his death sparked an armed insurrection.

FMLN guerrillas gained control of areas in the north and east of El Salvador and blew up bridges, destroyed power lines and burned coffee plantations in a bid to stifle the country's economy. The Reagan Administration, unnerved by the success of Nicaragua's socialist revolution, donated huge amounts of money to the Salvadoran government, and the military retaliated by decimating villages, causing 300,000 citizens to flee the country. In 1982, the extreme right ARENA party took power and death squads began targeting trade unionists and agrarian reformers. In April 1990, United Nations-mediated negotiations began between the government and the FMLN, and finally, on 16 January 1992, a compromise was signed and a ceasefire took effect. The FMLN became an opposition party, and the government agreed to various reforms, including dismantling the death squads and replacing them with a national civil police force. Land was to be distributed to citizens and human rights violations to be investigated. During the course of the 12-year war, an estimated 75,000 people were killed, and the US government donated a staggering US$6 billion to the Salvadoran government's war effort, despite knowledge of atrocities carried out by the military.

In March 1994, ARENA member Calderón Sol was voted president, amid allegations of electoral fraud. While some of the reforms outlined in the peace accords were implemented (most notably the land-transfer program), many Salvadorans consider the current situation to be no better now than it was before the civil war. Unemployment, poverty, disgruntled ex-combatants and a proliferation of guns in the country has led to high homicide rates - just one of the reasons why approximately 20% of Salvadorans now live abroad. In March 1997, the FMLN won elections in the cities of six of the 14 departments; it now governs a greater percentage of the population than ARENA and holds a majority in congress. However, ARENA candidate Francisco Guillermo Flores Pérez succeeded Presidente Calderon on 1 June 1999. Flores' first real test came on January 13, 2001, when a major earthquake touched off a mudslide that buried the middle-class neighborhood of Las Colinas, a suburb of San Salvador. Scores of shacks in surrounding impoverished shantytowns also collapsed. Flores had refused to listen to environmentalists trying to block further development of Las Colinas' sandy, unstable hillsides; his decision may have left 1200 dead and 250,000 homeless. To rebuild will cost more than half of the country's yearly budget; in response to the unforseen expenditure, FMLN officials have called on Flores to suspend the adoption of the US dollar as the national currency. Meanwhile, the bread-and-butter consequences of more than 3000 aftershocks - some nearly as devastating as the original tremor - continue to ripple through the region.