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Prussia engineered a war with Austria in 1866; they had previously been allies in a war against Denmark. Bismarck, Prussia's chancellor, knew that Austria needed to be taken out of the picture in order for Prussia to take control of unified Germany. So he came up with an excuse to fight Austria- he claimed that Austria had violated the treaties that came in the aftermath of the Denmark war.

The Austrian military was not as good as the Prussian military- there were a few small battles leading up to one large battle at Königgrätz, in which a large Austrian army was badly mauled by two smaller Prussian armies. After the crushing defeat, Austria asked for peace- which Prussia was more than willing to give. Prussia was afraid that if the war dragged for too long, powerful countries like France or England might get involved, and Prussia did not want this to happen. Italy, which was in the process of unifying much like Germany, joined in the war, hoping to take Venetia (the region around Venice) from Austria.

The peace treaty ending the war permanently forced Austria out of German politics, allowing Prussia to become the new leader. It also allowed Prussia to form a confederation that controlled most of northern Germany, paving the way for full unification five years later. Italy did indeed defeat Austria and gained Venetia- and a couple years later also achieved full unification.

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