Japan had gained a large sphere of influence in northern China and  Manchuria through its victories in the First Sino-Japanese War and the Russo-Japanese war, and had thus joined the ranks of the European imperialist powers in their scramble to establish political and economic domination over China. With the overthrow of the Qing Dynasty in the Xinhai Revolution, and the establishment of the new Republic of China under General Yuan Shikai, Japan saw an opportunity to expand its position in China. Motivated to join World War I by a desire to expand its territorial interest, Japan formally declared war on Germany on August 23, 1914, and joined the Allied (Entente) Powers of WWI which included Great Britain, France, and Russia. 

On January 18, 1915, after capturing the German colony at Qingdao, with Europe distracted by the War, Japan sent a secret ultimatum, the Twenty-One Demands, to Yuan’s government. The Demands called for recognition of Japan's paramount diplomatic and economic interest in Shandong province, extraterritoriality, concessions in Inner Mongolia and Manchuria, and joint control of iron and steel.  The Demands were organized into five groups, of which Group Five was most contentious, ranging from appointing Japanese advisors to the Chinese central government and police force to allowing Japanese Buddhist preachers to conduct missionary activities in China.

Yuan attempted to stall for as long as possible and leaked the full contents of the Twenty-One Demands to the European powers in the hope that a perceived threat to their own spheres of influence would help contain Japan.

After China rejected Japan's revised proposal on April 26, ‘Group 5’ was deleted from the document. A reduced set of "Thirteen Demands" was transmitted on May 7 in the form of an ultimatum, with a two-day deadline for response. Yuan, competing with other warlords, was not in a position to risk war with Japan, and accepted appeasement. The final form of the treaty was signed by both parties on May 25, 1915.

The results of the revised final (Thirteen Demands) version of the Twenty-One Demands were far more negative for Japan than positive. Without ‘Group 5,’ the new treaty gave Japan little that it did not already have in China.

The United States expressed strongly negative reactions to Japan's implicit rejection of the Open Door Policy. On March 13, 1915, US Secretary of State William Jennings Bryan affirmed Japan's "special interests" in Manchuria, Mongolia and Shandong, but expressed concern over further encroachments to Chinese sovereignty. Japan dropped its odious demands that China accept Japanese policy advisors, and the US and Japan compromised with the Lansing-Ishii Agreement of 1917, in which Japan vaguely accepted the Open Door.

In China, the overall political impact of Japan's actions was highly negative, creating a significant upsurge in nationalism.

Japan continued to push for outright control over Shandong Province and won European diplomatic recognition for its claim at the Treaty of Versailles (despite the refusal of the Chinese delegation to sign the treaty). This in turn provoked ill-will from the US government as well as widespread hostility within China. The effects of the Twenty-One Demands were invalidated by the Washington Conference of 1921-22 when Japan agreed to withdraw its troops from Shandong and restore China’s sovereignty.