Fighting against the White Russians culminated in the capture of von Ungern-Sternberg in August 1921; the rest of his forces were defeated by January 1922. On September 14, 1921, the independence of Mongolia was proclaimed, and on October 26 a legislative assembly, the National Provisional Little Hural, opened. The formalization of Mongolian-Soviet relations then was accelerated. On November 5, 1921, a bilateral Agreement on Mutual Recognition and Friendly Relations was signed in Moscow. It recognized the People's Government of Mongolia, and it facilitated the exchange of diplomatic representatives. Furthermore, it provided for the self-determination of Tannu Tuva, a region in northwestern Mongolia that had been a Russian protectorate between 1914 and 1917.

At this juncture, discord emerged among the Mongolian factions. When supporters of the Bogdo Khan regime expressed displeasure with the limits placed on the monarchy, the Mongolian People's Party levied further restrictions on it, while giving more power to the party-controlled government. At the same time, some members of the new regime were concerned about Mongolia's close relationship with the Soviet Union. Even Premier Bodoo sought to distance himself from Soviet influence. In August 1922, however, he and forty others were arrested and charged with "counterrevolutionary activities" and with wanting to restore an unlimited monarchy. Bodoo and fourteen others were executed. When the Second Party Congress of the Mongolian People's Party was held in July 1923, Mongolian-Soviet solidarity was reiterated amid calls, for the first time, in favor of purging "oppressor class elements" from the party.

At this critical stage, several key leadership changes occurred that caused momentous political developments. On February 22, 1923, thirty-year-old revolutionary hero Sukhe Bator died of illness (although Choybalsan later claimed he had been poisoned), leaving the way clear for Choybalsan's eventual accession. Next, the Jebtsundamba Khutuktu died on May 20, 1924, and the People's Government, which had resolved to form a republic, forbade the traditional search for the reincarnation of the defunct ruler. This move eliminated the theocratic symbol of Mongolia. At the same time, a new Soviet treaty with China on May 31, 1924 (which provided for the withdrawal of Soviet troops from Mongolia), set the stage for the final step in the nominal independence of Mongolia.

The Third Party Congress of the Mongolian People's Party met in Niyslel Huree from August 4 to 24, 1924, but it quickly became embroiled in a debate led by party chairman Dandzan, who, like Bodoo, hoped to reduce Soviet influence. The congress culminated in the arrest and execution of the "capitalist" Dandzan. Among the achievements of the congress was purging the party of "useless elements" and renaming it the Mongolian People's Revolutionary Party. On November 25, 1924, with the adoption of a Soviet-style state constitution by the First National Great Hural, the new national assembly, the Mongolian People's Republic was formally established. The National Little Hural, the standing body when the National Great Hural was not in session, was elected; it, in turn, elected a cabinet with Balingiyn Tserendorj as premier and Choybalsan as commander in chief of the army. At the same time, Niyslel Huree was renamed Ulaanbaatar (literally, Red Hero).

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Source: U.S. Library of Congress