The Hungarian Revolution of 1956 occurred shortly after Khrushchev arranged the removal of Hungary's Stalinist leader Mátyás Rákosi. In response to a popular uprising, the new regime formally disbanded the secret police, declared its intention to withdraw from the Warsaw Pact and pledged to re-establish free elections. The Soviet Army invaded. Thousands of Hungarians were arrested, imprisoned and deported to the Soviet Union, and approximately 200,000 Hungarians fled Hungary in the chaos. Hungarian leader Imre Nagy and others were executed following secret trials.

The events in Hungary produced ideological fractures within the communist parties of the world, particularly in Western Europe, with great decline in membership as many in both western and socialist countries felt disillusioned by the brutal Soviet response. The communist parties in the West would never recover from the effect the Hungarian Revolution had on their membership, a fact that was immediately recognized by some, such as the Yugoslavian politician Milovan Đilas who shortly after the revolution was crushed said that "The wound which the Hungarian Revolution inflicted on communism can never be completely healed".