Formerly administered as part of the British Crown Colony of Mauritius, the British Indian Ocean Territory (BIOT) was established as an overseas territory of the UK in 1965. A number of the islands in the territory were later transferred to the Seychelles when it gained independence in 1976. Subsequently, BIOT has consisted of the six main island groups that make up the Chagos Archipelago. Only Diego Garcia, the largest and most southerly of the islands, is inhabited. It contains a joint UK-US naval support facility and hosts one of four dedicated ground antennas that assist in the operation of the Global Positioning System (GPS) navigation system -- the others are on Kwajalein (Marshall Islands); at Cape Canaveral, Florida (US); and on Ascension Island (Saint Helena, Ascension, and Tristan da Cunha). The US Air Force also operates a telescope array on Diego Garcia as part of the Ground-Based Electro-Optical Deep Space Surveillance System (GEODSS) for tracking orbital debris, which can be a hazard to spacecraft and astronauts.

Between 1967 and 1973, the former agricultural workers who lived on the islands were relocated, primarily to Mauritius but also to the Seychelles. Negotiations with the UK between 1971 and 1982 resulted in the establishment of a trust fund to compensate the displaced islanders, known as Chagossians. Beginning in 1998, the islanders pursued a series of lawsuits against the British Government, seeking further compensation and the right to return to the territory. British court rulings in 2006 and 2007 invalidated immigration policies that had excluded the islanders from the archipelago, but in 2008, the House of Lords -- the final court of appeal in the UK -- ruled in favor of the British Government by overturning the lower court rulings and finding no right of return for the Chagossians. In 2015, the Permanent Court of Arbitration unanimously held that the marine protected area that the UK declared around the Chagos Archipelago in 2010 violated the UN Convention on the Law of the Sea.

In 2019, the International Court of Justice ruled in an advisory opinion that Britain’s decolonization of Mauritius was not lawful because of continued Chagossian claims. A non-binding 2019 UN General Assembly vote demanded that Britain end its “colonial administration” of the Chagos Archipelago and that it be returned to Mauritius. UK officials continue to defend Britain's sovereignty over the islands and argue that the issue is a bilateral dispute between Mauritius and the UK that does not warrant international intervention.