The Anglo-Dutch Treaty of 1824 was established to address the complexities and ambiguities arising from the British occupation of Dutch colonies during the Napoleonic Wars and the longstanding trade rights in the Spice Islands. The inception of Singapore by Sir Stamford Raffles in 1819 heightened tensions, as the Dutch challenged its legitimacy, asserting that the Sultanate of Johor, with whom Raffles had made an agreement, was under Dutch influence. Matters were further complicated by uncertainties surrounding Dutch trade rights in British India and the previously Dutch-held territories. Initial negotiations began in 1820, focusing on uncontroversial topics. However, as the strategic and commercial significance of Singapore became evident to the British, discussions were revived in 1823, emphasizing clear demarcations of influence in Southeast Asia.

By the time the treaty negotiations resumed, the Dutch recognized the unstoppable growth of Singapore. They proposed a territory exchange, relinquishing their claims north of the Strait of Malacca and their Indian colonies in return for the British ceding territories south of the strait, which included Bencoolen. The final treaty, signed in 1824, delineated two primary territories: Malaya under British control and the Dutch East Indies under Dutch rule. This demarcation later evolved into present-day borders, with Malaya's successor states being Malaysia and Singapore, and the Dutch East Indies becoming Indonesia.

The significance of the Anglo-Dutch Treaty extended beyond territorial demarcations. It played a pivotal role in shaping regional languages, leading to the evolution of Malaysian and Indonesian linguistic variants from the Malay language. The treaty also marked a shift in colonial power dynamics, with the declining influence of the British East India Company and the emergence of independent merchants. Singapore's rise as a free port, exemplifying British free-trade imperialism, was a direct outcome of its validation through this treaty.