As a scion of the Royal house of Hohenzollern, Wilhelm was also exposed from an early age to the military society of the Prussian aristocracy. This had a major impact on him and, in maturity, Wilhelm was seldom to be seen out of uniform. The hyper-masculine military culture of Prussia in this period did much to frame Wilhelm's political ideals as well as his personal relationships. Wilhelm's relationship with the male members of his family was as interesting as that with his mother. Crown Prince Frederick was viewed by his son with a deeply felt love and respect. His father's status as a hero of the wars of unification was largely responsible for the young Wilhelm's attitude, as in the circumstances in which he was raised; close emotional contact between father and son was not encouraged. Later, as he came into contact with the Crown Prince's political opponents, Wilhelm came to adopt more ambivalent feelings toward his father, given the perceived influence of Wilhelm's mother over a figure who should have been possessed of masculine independence and strength. Wilhelm also idolised his grandfather, Wilhelm I, and he was instrumental in later attempts to foster a cult of the first German Emperor as "Wilhelm the Great".

In many ways, Wilhelm was a victim of his inheritance and of Otto von Bismarck's machinations. Both sides of his family had suffered from mental illness, and this may explain his emotional instability. The Emperor's parents, Frederick and Victoria, were great admirers of the Prince Consort of the United Kingdom, Victoria's father. They planned to rule as consorts, like Albert and Queen Victoria, and they planned to reform the fatal flaws in the executive branch that Bismarck had created for himself. The office of Chancellor responsible to the Emperor would be replaced with a British-style cabinet, with ministers responsible to the Reichstag. Government policy would be based on the consensus of the cabinet. Frederick "described the Imperial Constitution as ingeniously contrived chaos."

"The Crown Prince and Princess shared the outlook of the Progressive Party, and Bismarck was haunted by the fear that should the old Emperor die -- and he was now in his seventies -- they would call on one of the Progressive leaders to become Chancellor. He sought to guard against such a turn by keeping the Crown Prince from a position of any influence and by using foul means as well as fair to make him unpopular."

When Wilhelm was in his early twenties, Bismarck tried to separate him from his liberal parents with some success. Bismarck planned to use the young prince as a weapon against his parents in order to retain his own political dominance. Wilhelm thus developed a dysfunctional relationship with his parents, but especially with his English mother. In an outburst in April 1889, which the Empress Victoria conveyed in a letter to her mother, Queen Victoria, Wilhelm angrily implied that “an English doctor killed my father, and an English doctor crippled my arm – which is the fault of my mother” who allowed no German physicians to attend to herself or her immediate family.

The German Emperor Wilhelm I died in Berlin on 9 March 1888, and Prince Wilhelm's father was proclaimed Emperor as Frederick III. He was already suffering from an incurable throat cancer and spent all 99 days of his reign fighting the disease before dying. On 15 June of that same year, his 29-year-old son succeeded him as German Emperor and King of Prussia. Although in his youth he had been a great admirer of Otto von Bismarck, Wilhelm's characteristic impatience soon brought him into conflict with the "Iron Chancellor", the dominant figure in the foundation of his empire. The new Emperor opposed Bismarck's careful foreign policy, preferring vigorous and rapid expansion to protect Germany's "place in the sun." Furthermore, the young Emperor had come to the throne with the determination that he was going to rule as well as reign, unlike his grandfather, who had largely been content to leave day-to-day administration to Bismarck. Early conflicts between Wilhelm II and his chancellor soon poisoned the relationship between the two men. Bismarck believed that Wilhelm was a lightweight who could be dominated, and he showed scant respect for Wilhelm's policies in the late 1880s. The final split between monarch and statesman occurred soon after an attempt by Bismarck to implement a far-reaching anti-Socialist law in early 1890.

It was during this time that Bismarck, after gaining an absolute majority in favour of his policies in the Reichstag, decided to make the anti-Socialist laws permanent. His Kartell, the majority of the amalgamated Conservative Party and the National Liberal Party, favoured making the laws permanent, with one exception: the police power to expel Socialist agitators from their homes. This power had been used excessively at times against political opponents, and the National Liberal Party was unwilling to make the expulsion clause permanent. Bismarck would not give his assent to a modified bill, so the Kartell split over this issue. The Conservatives would support the bill only in its entirety, and threatened to, and eventually did, veto the entire bill. As the debate continued, Wilhelm became increasingly interested in social problems, especially the treatment of mine workers who went on strike in 1889. Following his policy of active participation in government, he routinely interrupted Bismarck in Council to make clear where he stood on social policy. Bismarck sharply disagreed with Wilhelm's policy and worked to circumvent it. Even though Wilhelm supported the altered anti-Socialist bill, Bismarck pushed for his support to veto the bill in its entirety, but when Bismarck's arguments couldn't convince Wilhelm, he became excited and agitated until uncharacteristically he blurted out his motive for having the bill fail: he wanted the Socialists to agitate until a violent clash occurred that could be used as a pretext to crush them. Wilhelm replied that he wasn't willing to open his reign with a bloody campaign against his subjects. The next day, after realizing his blunder, Bismarck attempted to reach a compromise with Wilhelm by agreeing to his social policy towards industrial workers, and even suggested a European council to discuss working conditions, presided over by the German Emperor.

Despite this, a turn of events eventually led to his distance from Wilhelm. Bismarck, feeling pressured and unappreciated by the Emperor and undermined by ambitious advisors, refused to sign a proclamation regarding the protection of workers along with Wilhelm, as was required by the German Constitution, to protest Wilhelm's ever-increasing interference with Bismarck's previously unquestioned authority. Bismarck also worked behind the scenes to break the Continental labor council Wilhelm held so dear. The final break came as Bismarck searched for a new parliamentary majority, with his Kartell voted from power due to the anti-Socialist bill fiasco. The remaining powers in the Reichstag were the Catholic Centre Party and the Conservative Party. Bismarck wished to form a new bloc with the Centre Party, and invited Ludwig Windthorst, the party's parliamentary leader, to discuss an alliance. This would be Bismarck's last political maneuver. Wilhelm was furious to hear about Windthorst's visit. In a parliamentary state, the head of government depends on the confidence of the parliamentary majority, and certainly has the right to form coalitions to ensure his policies a majority, but in Germany, the Chancellor depended on the confidence of the Emperor alone, and Wilhelm believed that the Emperor had the right to be informed before his minister's meeting. After a heated argument in Bismarck's estate over Imperial authority, Wilhelm stormed out, both parting ways permanently. Bismarck, forced for the first time into a situation he could not use to his advantage, wrote a blistering letter of resignation, decrying Wilhelm's interference in foreign and domestic policy, which was only published after Bismarck's death. When Bismarck realized that his dismissal was imminent:

All Bismarck’s resources were deployed; he even asked Empress Frederick to use her influence with her son on his behalf. But the wizard had lost his magic; his spells were powerless because they were exerted on people who did not respect them, and he who had so signally disregarded Kant’s command to use people as ends in themselves had too small a stock of loyalty to draw on. As Lord Salisbury told Queen Victoria: 'The very qualities which Bismarck fostered in the Emperor in order to strengthen himself when the Emperor Frederick should come to the throne have been the qualities by which he has been overthrown.' The Empress, with what must have been a mixture of pity and triumph, told him that her influence with her son could not save him for he himself had destroyed it.

Although Bismarck had sponsored landmark social security legislation, by 1889–90 he had become disillusioned with the attitude of workers. In particular, he was opposed to wage increases, improving working conditions, and regulating labor relations. Moreover the Kartell, the shifting political coalition that Bismarck had been able to forge since 1867, had lost a working majority in the Reichstag. Bismarck also attempted to sabotage the Labor Conference that the Kaiser was organizing. In March 1890, the dismissal of Bismarck coincided with the Kaiser's opening of the Labor Conference in Berlin. Subsequently at the opening of the Reichstag on 6 May 1890, the Kaiser stated that the most pressing issue was the further enlargement of the bill concerning the protection of the laborer. In 1891, the Reichstag passed the Workers Protection Acts, which improved working conditions, protected women and children and regulated labor relations.

It has been alleged that Bismarck was organizing a military coup that would disband the striking miners, dissolve the Reichstag, repeal the universal suffrage law, introduce limited suffrage, reduce the Kaiser to a puppet, and establish a military dictatorship. The book that accompanied the BBC series Fall of Eagles — which covered the period 1848 – 1918 and traced the downfall of the Romanov, Habsburg and Hohenzollern dynasties — contains an interview in which Louis Ferdinand, a grandson of the Kaiser, says:

Had Bismarck stayed he would not have helped. He already wanted to abolish all the reforms that had been introduced. He was aspiring to establish a kind of shogunate and hoped to treat our family in the same way the Japanese shoguns treated the Japanese emperors isolated in Kyoto. My grandfather had no other choice but to dismiss him.

Bismarck resigned at Wilhelm II's insistence in 1890, at age 75, to be succeeded as Chancellor of Germany and Minister-President of Prussia by Leo von Caprivi, who in turn was replaced by Chlodwig zu Hohenlohe-Schillingsfürst in 1894. In appointing Caprivi and then Hohenlohe, Wilhelm was embarking upon what is known to history as "the New Course", in which he hoped to exert decisive influence in the government of the empire. There is debate amongst historians as to the precise degree to which Wilhelm succeeded in implementing "personal rule" in this era, but what is clear is the very different dynamic which existed between the Crown and its chief political servant (the Chancellor) in the "Wilhelmine Era". These chancellors were senior civil servants and not seasoned politician-statesmen like Bismarck. Wilhelm wanted to preclude the emergence of another Iron Chancellor, whom he ultimately detested as being "a boorish old killjoy" who had not permitted any minister to see the Emperor except in his presence, keeping a stranglehold on effective political power. Upon his enforced retirement and until his dying day, Bismarck was to become a bitter critic of Wilhelm's policies, but without the support of the supreme arbiter of all political appointments (the Emperor) there was little chance of Bismarck exerting a decisive influence on policy. Something which Bismarck was able to effect was the creation of the "Bismarck myth". This was a view — which some would argue was confirmed by subsequent events — that, with the dismissal of the Iron Chancellor, Wilhelm II effectively destroyed any chance Germany had of stable and effective government. In this view, Wilhelm's "New Course" was characterised far more as the German ship of state going out of control, eventually leading through a series of crises to the carnage of the First and Second World Wars.

Following the dismissal of Hohenlohe in 1900, Wilhelm appointed the man whom he regarded as "his own Bismarck", Bernhard von Bülow. Wilhelm hoped that in Bülow, he had found a man who would combine the ability of the Iron Chancellor with the respect for Wilhelm's wishes which would allow the empire to be governed as he saw fit. Wilhelm's involvement in the domestic sphere was more limited in the early twentieth century than it had been in the first years of his reign. In part, this was due to the appointment of Bülow and Bethmann — arguably both men of greater force of character than Wilhelm's earlier chancellors — but also because of his increasing interest in foreign affairs.

German foreign policy under Wilhelm II was faced with a number of significant problems. Perhaps the most apparent was that Wilhelm was an impatient man, subjective in his reactions and affected strongly by sentiment and impulse. He was personally ill-equipped to steer German foreign policy along a rational course. It is now widely recognized that the various spectacular acts which Wilhelm undertook in the international sphere were often partially encouraged by the German foreign policy elite. There were a number of key exceptions, such as the famous Kruger telegram of 1896 in which Wilhelm congratulated President Paul Kruger of the Transvaal Republic on the suppression of the Jameson Raid, thus alienating British public opinion. After the murder of the German ambassador during the Boxer Rebellion in 1900, a regiment of German troops was sent to China. In a speech of 27 July 1900, the Emperor exhorted these troops:

"Should you encounter the enemy, he will be defeated! No quarter will be given! Prisoners will not be taken! Whoever falls into your hands is forfeited. Just as a thousand years ago the Huns under their King Attila made a name for themselves, one that even today makes them seem mighty in history and legend, may the name German be affirmed by you in such a way in China that no Chinese will ever again dare to look cross-eyed at a German.”

Though its full impact was not felt until many years later, when Entente and American propagandists took advantage from this careless public speech, this is another example of his unfortunate propensity for impolitic public utterances. This weakness made him vulnerable to manipulation by interests within the German foreign policy elite, as subsequent events were to prove. Wilhelm had much disdain for his uncle, King Edward VII of the United Kingdom, who was much more popular as a sovereign in Europe.

One of the few times Wilhelm succeeded in personal "diplomacy" was when with he supported Archduke Franz Ferdinand of Austria in marrying Sophie Chotek in 1900 against the wishes of Emperor Franz Joseph. Deeply in love, Franz Ferdinand refused to consider marrying anyone else. Pope Leo XIII, Tsar Nicholas II of Russia, and Wilhelm all made representations on Franz Ferdinand's behalf to the Emperor Franz Joseph, arguing that the disagreement between Franz Joseph and Franz Ferdinand was undermining the stability of the monarchy.

One "domestic" triumph for Wilhelm was when his daughter Victoria Louise married the Duke of Brunswick in 1913; this helped heal the rift between the House of Hanover and the House of Hohenzollern after the 1866 annexation of Hanover by Prussia. In 1914, Wilhelm's son Prince Adalbert of Prussia married a Princess of the Ducal House of Saxe-Meiningen. However the rifts between the House of Hohenzollern and the two leading Royal dynasties of Europe — the House of Saxe-Coburg and Gotha and House of Romanov — would only get worse.

Following his dismissal of Bismarck, Wilhelm and his new chancellor Caprivi became aware of the existence of the secret Reinsurance Treaty with the Russian Empire, which Bismarck had concluded in 1887. Wilhelm's refusal to renew this agreement which guaranteed Russian neutrality in the event of an attack by France was seen by many historians as the worst offense committed by Wilhelm in terms of foreign policy. In reality, the decision to allow the lapse of the treaty was largely the responsibility of Caprivi, though Wilhelm supported his chancellor's actions. It is important not to overestimate the influence of the Emperor in matters of foreign policy after the dismissal of Bismarck, but it is certain that his erratic meddling contributed to the general lack of coherence and consistency in the policy of the German Empire toward other powers.

In December 1897, Wilhelm visited Bismarck for the last time. On many occasions, Bismarck had expressed grave concerns about the dangers of improvising government policy based on the intrigues of courtiers and militarists. Bismarck’s last warning to Wilhelm was:

Your Majesty, so long as you have this present officer corps, you can do as you please. But when this is no longer the case, it will be very different for you.

Subsequently, just before he died, Bismarck made these dire and accurate predictions:

Jena twenty years after the death of Frederick the Great; the crash will come twenty years after my departure if things go on like this" ― a prophecy fulfilled almost to the month. 

One day the great European War will come out of some damned foolish thing in the Balkans.

Bismarck had warned in February 1888 of a Balkan crisis turning into a world war (although when that war did come in 1914, the Balkan country was Serbia, not Bulgaria):

He warned of the imminent possibility that Germany will have to fight on two fronts; he spoke of the desire for peace; then he set forth the Balkan case for war and demonstrates its futility: "Bulgaria, that little country between the Danube and the Balkans, is far from being an object of adequate importance... for which to plunge Europe from Moscow to the Pyrenees, and from the North Sea to Palermo, into a war whose issue no man can foresee. At the end of the conflict we should scarcely know why we had fought."

A typical example of this was his "love-hate" relationship with the United Kingdom and in particular with his British cousins. He returned to England in January 1901 to be at the bedside of his grandmother, Queen Victoria, and was holding her in his arms at the moment of her death. Open armed conflict with Britain was never what Wilhelm had in mind — "a most unimaginable thing", as he once quipped — yet he often gave in to the generally anti-British sentiments within the upper echelons of the German government, conforming as they did to his own prejudices toward Britain which arose from his youth. When war came about in 1914, Wilhelm sincerely believed that he was the victim of a diplomatic conspiracy set up by his late uncle, Edward VII, in which Britain had actively sought to "encircle" Germany through the conclusion of the Entente Cordiale with France in 1904 and a similar arrangement with Russia in 1907. This is indicative of the fact that Wilhelm had a highly unrealistic belief in the importance of "personal diplomacy" between European monarchs, and could not comprehend that the very different constitutional position of his British cousins made this largely irrelevant. A reading of the Entente Cordiale shows that it was actually an attempt to put aside the ancient rivalries between France and Great Britain rather than an "encirclement" of Germany.

Similarly, he believed that his personal relationship with his cousin-in-law Nicholas II of Russia (The Willy-Nicky Correspondence) was sufficient to prevent war between the two powers. At a private meeting at Björkö in 1905, Wilhelm concluded an agreement with his cousin which amounted to a treaty of alliance, without first consulting with Bülow. A similar situation confronted Czar Nicholas on his return to St. Petersburg, and the treaty was, as a result, a dead letter. But Wilhelm believed that Bülow had betrayed him, and this contributed to the growing sense of dissatisfaction he felt towards the man he hoped would be his foremost servant. In broadly similar terms to the "personal diplomacy" at Björkö, his attempts to avoid war with Russia by an exchange of telegrams with Nicholas II in the last days before the outbreak of the First World War came unstuck due to the reality of European power politics. His attempts to woo Russia were also seriously out of step with existing German commitments to Austria-Hungary. In a chivalrous fidelity to the Austro-Hungarian/German alliance, Wilhelm informed the Emperor Franz Joseph I of Austria in 1889 that "the day of Austro-Hungarian mobilisation, for whatever cause, will be the day of German mobilisation too". Given that Austrian mobilisation for war would most likely be against Russia, a policy of alliance with both powers was obviously impossible. Wilhelm additionally believed in inferiority of Slavs and is known to have said in 1913 that "The Slavs were not born to rule but to serve, this they must be taught".

In some cases, Wilhelm II's diplomatic "blunders" were often part of a wider reaching policy emanating from the German governing élite. One such action sparked the Moroccan Crisis of 1905, when Wilhelm was persuaded (largely against his wishes) to make a spectacular visit to Tangier, in Morocco. Wilhelm's presence was seen as an assertion of German interests in Morocco and in a speech he even made certain remarks in favour of Moroccan independence. This led to friction with France, which had expanding colonial interests in Morocco, and led to the Algeciras Conference, which served largely to further isolate Germany in Europe. Britain and France's alliance fortified as a corollary, mainly due to the fact that Britain advocated France's endeavors to colonise Morocco, whereas Wilhelm supported Moroccan self-determination: and so, the German Emperor became even more resentful.

Perhaps Wilhelm's most damaging personal blunder in the arena of foreign policy had a far greater impact in Germany than internationally. The Daily Telegraph Affair of 1908 stemmed from the publication of some of Wilhelm's opinions in edited form in the British daily newspaper of that name. Wilhelm saw it as an opportunity to promote his views and ideas on Anglo-German friendship, but instead, due to his emotional outbursts during the course of the interview, Wilhelm ended up further alienating not only the British people, but also the French, Russians, and Japanese all in one fell swoop by implying, inter alia, that the Germans cared nothing for the British; that the French and Russians had attempted to incite Germany to intervene in the Second Boer War; and that the German naval buildup was targeted against the Japanese, not Britain. (One memorable quote from the interview is "You English are mad, mad, mad as March hares.") The effect in Germany was quite significant, with serious calls for his abdication being mentioned in the press. Quite understandably, Wilhelm kept a very low profile for many months after the Daily Telegraph fiasco, and later exacted his revenge by enforcing the resignation of Prince Bülow, who had abandoned the Emperor to public criticism by publicly accepting some responsibility for not having edited the transcript of the interview before its publication.

The Daily Telegraph crisis deeply wounded Wilhelm's previously unimpaired self-confidence, so much so that he soon suffered a severe bout of depression from which he never really recovered (photographs of Wilhelm in the post-1908 period show a man with far more haggard features and greying hair), and he lost much of the influence he had previously exercised in domestic and foreign policy.

Nothing Wilhelm II did in the international arena was of more influence than his decision to pursue a policy of massive naval construction. A powerful navy was Wilhelm's pet project. He had inherited, from his mother, a love of the British Royal Navy, which was at that time the world's largest. He once confided to his uncle, Edward VII, that his dream was to have a "fleet of my own some day". Wilhelm's frustration over his fleet's poor showing at the Fleet Review at his grandmother Queen Victoria's Diamond Jubilee celebrations, combined with his inability to exert German influence in South Africa following the dispatch of the Kruger telegram, led to Wilhelm taking definitive steps toward the construction of a fleet to rival that of his British cousins. Wilhelm was fortunate to be able to call on the services of the dynamic naval officer Alfred von Tirpitz, whom he appointed to the head of the Imperial Naval Office in 1897. The new admiral had conceived of what came to be known as the "Risk Theory" or the Tirpitz Plan, by which Germany could force Britain to accede to German demands in the international arena through the threat posed by a powerful battlefleet concentrated in the North Sea. Tirpitz enjoyed Wilhelm's full support in his advocacy of successive naval bills of 1897 and 1900, by which the German navy was built up to contend with that of the United Kingdom. Naval expansion under the Fleet Acts eventually led to severe financial strains in Germany by 1914, as by 1906 Wilhelm had committed his navy to construction of the much larger, more expensive dreadnought type of battleship.

In 1889 Wilhelm II reorganised top level control of the navy by creating a Navy Cabinet (Marine-Kabinett) equivalent to the German Imperial Military Cabinet which had previously functioned in the same capacity for both the army and navy. The Head of the navy cabinet was responsible for promotions, appointments, administration and issuing orders to naval forces. Captain Gustav von Senden-Bibran was appointed as its first head and remained so until 1906. The existing Imperial admiralty was abolished and its responsibilities divided between two organisations. A new position (equivalent to the supreme commander of the army) was created, chief of the high command of the admiralty (Oberkommando der Marine), being responsible for ship deployments, strategy and tactics. Vice Admiral Max von der Goltz was appointed in 1889 and remained in post until 1895. Construction and maintenance of ships and obtaining supplies was the responsibility of the State Secretary of the Imperial Navy Office (Reichsmarineamt), responsible to the Chancellor and advising the Reichstag on naval matters. The first appointee was Rear Admiral Eduard Heusner, followed shortly by Rear Admiral Friedrich von Hollmann from 1890 to 1897. Each of these three heads of department reported separately to Wilhelm II. In addition to the expansion of the fleet the Kiel Canal was opened in 1895 enabling faster movements between the North Sea and the Baltic Sea.

Wilhelm was a friend of Franz Ferdinand, Archduke of Austria-Este, and he was deeply shocked by his assassination on 28 June 1914. Wilhelm offered to support Austria-Hungary in crushing the Black Hand, the secret organization that had plotted the killing, and even sanctioned the use of force by Austria against the perceived source of the movement — Serbia (this is often called "the blank cheque"). He wanted to remain in Berlin until the crisis was resolved, but his courtiers persuaded him instead to go on his annual cruise of the North Sea on 6 July 1914. It was perhaps realized that Wilhelm's presence would be more of a hindrance to those elements in the government who wished to use the crisis to increase German prestige, even at the risk of general war — something of which Wilhelm, for all his bluster, was extremely apprehensive. Wilhelm made erratic attempts to stay on top of the crisis via telegram, and when the Austro-Hungarian ultimatum was delivered to Serbia, he hurried back to Berlin. He reached Berlin on 28 July, read a copy of the Serbian reply, and wrote on it:

A brilliant solution — and in barely 48 hours! This is more than could have been expected. A great moral victory for Vienna; but with it every pretext for war falls to the ground, and [the Ambassador] Giesl had better have stayed quietly at Belgrade. On this document, I should never have given orders for mobilization.

Unknown to the Emperor, Austro-Hungarian ministers and generals had already convinced the 84-year-old Francis Joseph I of Austria to sign a declaration of war against Serbia. As a direct consequence, Russia began a general mobilization to attack Austria in defense of Serbia. On the night of July 30 when handed a document stating that Russia would not cancel its mobilization, Wilhelm wrote a lengthy commentary containing the startling observations:

For I no longer have any doubt that England, Russia and France have agreed among themselves — knowing that our treaty obligations compel us to support Austria — to use the Austro-Serb conflict as a pretext for waging a war of annihilation against us ... Our dilemma over keeping faith with the old and honorable Emperor has been exploited to create a situation which gives England the excuse she has been seeking to annihilate us with a spurious appearance of justice on the pretext that she is helping France and maintaining the well-known Balance of Power in Europe, i.e. playing off all European States for her own benefit against us.

When it became clear that the United Kingdom would enter the war if Germany attacked France through neutral Belgium, the panic-stricken Wilhelm attempted to redirect the main attack against Russia. When Helmuth von Moltke (the younger) told him that this was impossible, Wilhelm said: "Your uncle would have given me a different answer!" Wilhelm is also reported to have said: "To think that George and Nicky should have played me false! If my grandmother had been alive, she would never have allowed it."

Wilhelm is a controversial issue in historical scholarship and this period of German history. Until the late 1950s he was seen as an important figure in German history during this period. For many years after that, the dominant view was that he had little or no influence on German policy, a view which has been challenged since the late 1970s, particularly by Professor John C.G. Röhl, who saw Wilhelm II as the key figure in understanding the recklessness and downfall of Imperial Germany. It is difficult to argue that Wilhelm actively sought to unleash the First World War. Though he had ambitions for the German Empire to be a world power, it was never Wilhelm's intention to conjure a large-scale conflict to achieve such ends. As soon as his better judgment dictated that a world war was imminent, he made strenuous efforts to preserve the peace — such as The Willy-Nicky Correspondence mentioned earlier, and his optimistic interpretation of the Austro-Hungarian ultimatum that Austro-Hungarian troops should go no further than Belgrade, thus limiting the conflict. But by then it was far too late, for the eager military officials of Germany and the German Foreign Office were successful in persuading him to sign the mobilisation order and initiate the Schlieffen Plan that envisioned the occupation of Paris within 40 days. The contemporary British reference to the First World War as "the Kaiser's War" in the same way that the Second was "Hitler's War" is not wholly accurate in its suggestion that Wilhelm was deliberately responsible for unleashing the conflict. "He may not have been 'the father of war' but he was certainly its godfather'. According to the the book, All Quiet on the Western Front, Remarque talks about the Kaiser's visit to the western front and how unimpressed he was by his height and speech.

His own love of the culture and trappings of militarism and push to endorse the German military establishment and industry (most notably the Krupp corporation), which were the key support which enabled his dynasty to rule helped push his empire into an armaments race with competing European powers. Similarly, though on signing the mobilisation order, Wilhelm is reported as having said, "You will regret this, gentlemen." He had encouraged Austria to pursue a hard line with Serbia, was an enthusiastic supporter of the subsequent German actions during the war, and reveled in the title of "Supreme War Lord" and "Allerhöchste" (All-highest).

Germany's war aims were published with his consent on 9 September 1914, and stiffened his enemies' resolve to avoid a compromise peace, whatever the costs. The role of ultimate arbiter of wartime national affairs proved too heavy a burden for Wilhelm. Even the advice of his closest aides such as Moriz von Lyncker was not adequate. As the war progressed, his influence receded and inevitably his lack of ability in military matters led to an ever-increasing reliance upon his generals, so much that after 1916 the Empire had effectively become a military dictatorship under the control of Paul von Hindenburg and Erich Ludendorff. Increasingly cut off from reality and the political decision-making process, Wilhelm vacillated between defeatism and dreams of victory, depending upon the fortunes of his armies. He remained a useful figurehead, and he toured the lines and munitions plants, awarded medals and gave encouraging speeches. In December 1916, the Germans attempted to negotiate peace with the Allies, declaring themselves the victors. The negotiations were mediated by the United States, but the Allies rejected the offer. A German poster from January 1917 quotes a speech by Kaiser Wilhelm II lambasting the Allies for their decision.

Nevertheless, Wilhelm still retained the ultimate authority in matters of political appointment, and it was only after his consent had been gained that major changes to the high command could be effected. Wilhelm was in favour of the dismissal of Helmuth von Moltke the Younger in September 1914 and his replacement by Erich von Falkenhayn. Similarly, Wilhelm was instrumental in the policy of inactivity adopted by the High Seas Fleet after the Battle of Jutland in 1916. Likewise, it was largely owing to his sense of having been pushed into the shadows that Wilhelm attempted to take a leading role in the crisis of 1918. In the end, he realized the necessity of capitulation and insisted that the German nation should not bleed to death for a dying cause.

Upon hearing that his cousin George V had changed the name of the British royal house to Windsor, Wilhelm remarked that he planned to see Shakespeare's play The Merry Wives of Saxe-Coburg-Gotha.

Following the 1917 February Revolution in Russia which saw the overthrow of Great War adversary Emperor Nicholas II, Wilhelm arranged for the exiled Russian Bolshevik leader Vladimir Lenin to return home from Switzerland via Germany, Sweden and Finland. Wilhelm hoped that Lenin would create political unrest back in Russia, which would help to end the war on the Eastern front, allowing Germany to concentrate on defeating the Western allies. The Swiss communist Fritz Platten managed to negotiate with the German government for Lenin and his company to travel through Germany by rail, on the so-called "sealed train". Lenin arrived in Petrograd on 16 April 1917, and seized power seven months later in the October Revolution. Wilhelm's strategy paid off when Russia signed the Treaty of Brest-Litovsk on 3 March 1918, withdrawing from the war and ceding Finland. On Lenin's orders, Nicholas II, Wilhelm's first cousin; Empress Alexandra; their five children; and their few servants were murdered by a Bolshevik firing squad in Yekaterinburg on 17 July 1918.

Wilhelm was at the Imperial Army headquarters in Spa, Belgium, when the uprisings in Berlin and other centres took him by surprise in late 1918. Mutiny among the ranks of his beloved Kaiserliche Marine, the imperial navy, profoundly shocked him. After the outbreak of the German Revolution, Wilhelm could not make up his mind whether or not to abdicate. Up to that point, he was confident that even if he were obliged to vacate the German throne, he would still retain the Prussian kingship. The unreality of this belief was revealed when, for the sake of preserving some form of government in the face of anarchy, Wilhelm's abdication both as German Emperor and King of Prussia was abruptly announced by the Chancellor, Prince Max of Baden, on 9 November 1918. (Prince Max himself was forced to resign later the same day, when it became clear that only Friedrich Ebert, leader of the SPD could effectively exert control.) Wilhelm consented to the abdication only after Ludendorff's replacement, General Wilhelm Groener, had informed him that the officers and men of the army would march back in good order under Paul von Hindenburg's command, but would certainly not fight for Wilhelm's throne on the home front. The monarchy's last and strongest support had been broken, and finally even Hindenburg, himself a lifelong royalist, was obliged, with some embarrassment, to advise the Emperor to give up the crown. For telling Wilhelm the truth, Groener would not be forgiven by German arch-conservatives. The abdication instrument was not actually signed until 28 November; by then his six sons had sworn not to succeed him, so ending the dynasty's connection with the crown of Prussia.

The following day, the now-former German Emperor Wilhelm II crossed the border by train and went into exile in the Netherlands, which had remained neutral throughout the war. Upon the conclusion of the Treaty of Versailles in early 1919, Article 227 expressly provided for the prosecution of Wilhelm "for a supreme offence against international morality and the sanctity of treaties", but Queen Wilhelmina refused to extradite him, despite appeals from the Allies. The erstwhile Emperor first settled in Amerongen, and then subsequently purchased a small castle in the municipality of Doorn on 16 August 1919 and moved in on 15 May 1920. This was to be his home for the remainder of his life. From this residence, Huis Doorn, Wilhelm absolved his officers and servants of their oath of loyalty to him; however, he himself never formally relinquished his titles, and hoped to return to Germany in the future. The Weimar Republic allowed Wilhelm to remove twenty-three railway wagons of furniture, twenty-seven containing packages of all sorts, one bearing a car and another a boat, from the New Palace at Potsdam.

The telegrams that were exchanged between the General Headquarters of the Imperial High Command, Berlin, and President Woodrow Wilson are discussed in Ferdinand Czernin's Versailles, 1919. The following telegram was sent through the Swiss government and arrived in Washington, D.C., on 5 October 1918:

The German Government requests the President of the United States of America to take steps for the restoration of peace, to notify all belligerents of this request, and to invite them to delegate positions for the purpose of taking up negotiations. The German Government accepts, as a basis of peace negotiations, the Program laid down by the President of the United States in his message to Congress of 8 January 1918, and his subsequent pronouncements, particularly in his address of 27 September 1918.

In order to avoid further bloodshed the German Government requests to bring about the immediate conclusion of an armistice on land, on water, and in the air.

—Max, Prince of Baden, Imperial Chancellor

In the subsequent two exchanges, Wilson's allusions "failed to convey the idea that the Kaiser's abdication was an essential condition for peace. The leading statesmen of the Reich were not yet ready to contemplate such a monstrous possibility." The third German telegram was sent on 20 October. Wilson's reply on 23 October contained the following:

If the Government of the United States must deal with the military masters and the monarchical autocrats of Germany now, or if it is likely to have to deal with them later in regard to the international obligations of the German Empire, it must demand not peace negotiations but surrender. Nothing can be gained by leaving this essential thing unsaid.

According to Czernin:

... Prince Hohenlohe, serving as councilor in the German Legation in Berne, Switzerland, cabled the German Foreign Office that 'a confidential informant has informed me that the conclusion of the Wilson note of 23 October refers to nothing less than the abdication of the Kaiser as the only way to a peace which is more or less tolerable.

Wilhelm's abdication was necessitated by the popular perceptions that had been created by the Entente propaganda against him, which had been picked and further refined when the U.S. declared war in April 1917. A much bigger obstacle, which contributed to the five-week delay in the signing of the armistice and to the resulting social deterioration in Europe, was the fact that the Entente Powers had no desire to accept the Fourteen Points and Wilson's subsequent promises. As Czernin points out:

The Allied statesmen were faced with a problem: so far they had considered the 'fourteen commandments' as a piece of clever and effective American propaganda, designed primarily to undermine the fighting spirit of the Central Powers, and to bolster the morale of the lesser Allies. Now, suddenly, the whole peace structure was supposed to be built up on that set of 'vague principles,' most of which seemed to them thoroughly unrealistic, and some of which, if they were to be seriously applied, were simply unacceptable.

The Kaiser himself wrote:

Nevertheless, it must be noted that John Kenneth Turner, in his [. . .] book, Shall it Be Again? gives extensive proof that all Wilson’s reasons for America's entry into the war were fictitious; that it was far more a cause of acting solely in the interest of Wall Street high finance.