The first anniversary of the Republic of Palau was celebrated with a joint issue of one stamp each from Palau and the United States. The two stamps had identical designs. Consisting of about two hundred islands, Palau became part of the U.S. -administered United Nations Trust Territory of the Pacific Islands after World War II, along with the Marshall Islands, the Mariana Islands, and the Caroline Islands. The trust territory later was divided into four internally self-governing units.

The Northern Marianas voted to become a U.S. commonwealth in 1975. Compacts of free association with the United States were approved in the Marshall Islands and the Federated States of Micronesia in 1983, making them sovereign states while the United States retains responsibility for defense and providing economic assistance. On December 22, 1990, the UN Security Council terminated trusteeship status for the rest of the trust territory, leaving Palau as the world's sole remaining UN trusteeship.

Although supported by a majority of Palauan voters, a free association arrangement between the United States and Palau failed to receive the necessary 75 percent voter approval during numerous referendums in 1980. It finally gained approval in 1994.