The British had negotiated with the Sultanate of Brunei for Labuan among other things. by 1847 the British government concluded a Treaty of Friendship and Commerce with the Sultan of Brunei, at the same time acquiring the island of Labuan. On 1 August 1848, Labuan was declared a free port and open to settlers. The Colonial Office took over Labuan in January 1906. In 1907 it became part of the Straits Settlements, a British colony comprising Singapore, Penang and Malacca.
During World War II, Labuan was occupied by the Japanese, along with other parts of what was then called British North Borneo (now Sabah). Thousands of Allied troops died in the fighting and eventual defeat of the Japanese in Labuan.
In 1963, Sabah joined the Federation of Malaysia, with Labuan included as a district of Sabah. In the 1984 Labuan Agreement, Sabah agreed to cede Labuan to the Federal Government of Malaysia. Labuan became a Federal Territory, with a status equivalent to that of the states of Malaysia.
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