In May 1938 Hitler was already planning for war with Czechoslovakia, and he had decided on October 1st of that year. He wanted to test the German armed forces and begin his push towards the East. In the following months, he escalated his war of words against Czechoslovakia. In early September 1938, President Beneš announced the "Fourth Plan" for constitutional changes to make Czechoslovakia into a federation. This did not meet all of the demands of the Karlsbad programme but would grant the Sudetenland autonomy. Henlein announced on 7 September 1938 that he was breaking off all contact with the Czechoslovak government, saying he was not interested in compromise.
On 12 September 1938, in his war-like speech at the Nuremberg Party Rally, Hitler dropped the demand for mere autonomy for the Sudetenland and formally demanded that the Sudetenland join Germany. From 12 September 1938 onward, Henlein helped organise numerous terrorist attacks and two coup attempts. This attempted uprising was quickly suppressed by Czechoslovak forces, whereafter Henlein fled to Germany, only to start numerous intrusions into Czechoslovak territory.
Meanwhile the British and French tried to save the peace of Europe. The British had already decided that Czechoslovakia was a lost cause and that it was inevitable that the Sudetenland would become German. Neither was France prepared to fight a major war over the issue. Prime Minister Chamberlain flew to Germany and eventually received Hitler's agreement that he would accept mere autonomy for the Sudetenland, after the Czechoslovaks agreed to hold a plebiscite (referendum). However, the volatile Hitler, desperate to have his planned war, quickly changed his mind and accused the Czechoslovaks of stalling and insincerity.
Czechoslovakia began mobilising its armed forces, but on 24th September, Hitler demanded that the Czechoslovaks accept his Sudetenland ultimatum by 14:00 on 28th September, otherwise he would take it by force. Eventually he postponed this to 1st October, due to Prime Minister Chamberlain's intervention. On 25 September, Czechoslovakia agreed to the conditions previously agreed upon by Britain, France, and Germany. The next day, however, Hitler added new demands, insisting that the claims of Czechoslovakia's other ethnic minorities also be satisfied. Chamberlain hurriedly arranged a meeting with Mussolini, Hitler, and Daladier (the French prime minister) for 29 September, and on 30 September 1938 they signed the Munich Agreement.
It was agreed that the German army would complete the occupation of the Sudetenland by 10 October, and an international commission would decide the future of other disputed areas. Czechoslovakia had not been invited to the meeting and was informed by Britain and France that it could either resist Nazi Germany alone or submit to the prescribed annexations. The Czechoslovak government, realizing the hopelessness of fighting the Nazis alone, reluctantly capitulated (30 September) and agreed to abide by the agreement. The settlement gave Germany the Sudetenland starting 10 October, and de facto control over the rest of Czechoslovakia as long as Hitler promised to go no further.
Hitler gained much of Czechoslovakia's industrial wealth and its famed arms factories without a fight. When he examined Czechoslovakia's fortifications on 1st October, he told Goebbels, "We would have shed much blood". Current opinion is that, with the help of Britain and France, Germany would have lost a war against Czechoslovakia, and the Second World War would have been avoided.