In the early 20th century, Montenegro maintained relations of trade with a number of European states. The most highly developed relations were with Austria-Hungary; in the year 1910, exports were worth 2.391.633 perpers, and imports, 8.166.661. The perper was the first Montenegrin currency, minted in 1906. Four years later, Montenegro minted gold sovereigns. The first bank was opened in Niksic in 1901. Industry - the wood-and-timber and food processing industries - was in its infancy, and Italian capital helped build a cigarette factor in Podgorica. Economic growth was accompanied with the building of roads: between 1897 and 1910, Montenegro built 464 kilometers of roads, and a 30-km-long Bar-Virpazar railway was inaugurated in 1909. An international radio telegraph line between Bar (Montenegro) and Bari (Italy) was established in 1904.

The finances of the Montenegrin state were based on taxes (corvee, army tax), parsons tithe, customs duty and, especially, Russian aid. Despite this, the state had to borrow abroad from 1897 to 1914, it concluded some 40 foreign loans and credits.

Great progress was recorded in education: in the year 1871, there were 41 schools, and in 1910, the number had risen to 136 schools with 12.000 students. The Theological and Pedagogical, School was opened in 1888. A Girls Institute (financed by the Empress of Russia, and fashioned on the model of similar institutions in Russia) operated from 1869 to 1912. It was attended by a total of 450 girl students. An eight-year grammar school worked from 1909, and in Infantry Officers School was opened in 1903. About 8 percent of the state budget was allocated for the purposes of education in 1908.

In the early 20th century, Montenegro had three publishing houses, which published a dozen weekly magazines (Nevesinje, Ogonost, Ustavnost, Cetinjski Vjesnik, Slobodna Rijec). From 1873 do 1915, Glas Crnogoraca (The Voice of the Montenegrin) was appearing as of the official gazette. The same period saw the publication of the first professional and literary magazines Zdravlje (Health), Prosvjeta (Education), Uciteljski list (Teachers Gazette), Trgovacki list (Commercial Gazette), Zemljoradnik (Farmer), Crnogorka (Montenegrin Woman), Nova Zeta (New Zeta), Knjizevni List (Literary Gazette), Dan (Day). The State Library and Museum were opened in 1893, and the theatre in 1910. There were no research institutes, which does not mean that there was no (individual) research work. A fair example of this was the work of Valtazar Bogisic who in 1888 prepared Opsti Imovinski Zakonik (The General Property Law), which was legalization of the customary law.

In the year 1912, Montenegro entered into an alliance with the Christian states of the Balkans (Serbia, Bulgaria, Greece), with a view to total national liberation from Ottoman rule. A military convention with Serbia defined the directions of offensive action. The Montenegrin army, organized on a territorial-tribal principle, of the militia type, poorly armed and equipped, was divided into three forces: the Coastal Force, commanded by General Mitar Martinovic, numbered 8.000 troops and 34 cannon, and was stationed at Bar. The Zeta Force, under the command of Crown Prince Danilo, numbered 15.000 troops and 40 cannon and was stationed at Podgorica. This force was entrusted with the most important task - the capture of Skadar. The Eastern Force, commanded by General Janko Vukotic and numbering 12.600 troops and 32 cannon, was deployed around Mojkovac, Berane and Plav with the task of guarding the border and launching offensives in the regions of Sandzak and Metohija if needed. Confronting the Montenegrin army was a Turkish army of 24.450 men and 150 cannon. The war against the Ottoman Empire, known in history as the First Balkan War, broke out on October 8, 1912, at Montenegro's declaration. In The early encounters, the Zeta Force achieved some initial advantage, but failed to use in to good purpose. The Forces advance on Skadar was slow, although it had an open read, the Catholic Albanian tribes having sided with Montenegro. This inertia enabled the Turkish commander to reinforce his defenses numerically. The Eastern Force did its job quickly; it liberated Mojkovac, Bijelo Polje, Pljevlja, Berane Rozaj, Plav, Gusinje and Djakovica (on November 4), marching in together with the Serbian army.

A truce was signed on December 3, with the situation around Skadar still unclear. The Battle of Skadar was resumed on 7-9 February 1913, with enormous losses at the Bardanjolt and Tarabos strongholds, but the city was not taken. This forced King Nikola to turn to Serbia for help. Acceding to his request, the Serbian government sent to his aid the Coastal Corps (numbering 30.450 troops, 41 cannon and 4 planes) specially formed for the purpose and commanded by General Petar Bojovic. No attack materialized, because the big powers had sent a strong protest to Montenegro demanding that it raise the siege of Skadar, after which eight men-of-war of the European powers sailed into Montenegrin waters in the Adriatic sea. On the other side. Russia forced Serbia to with draw its army from Skadar. Despite all this, the siege of Skadar was not abandoned. King Nikola and his Supreme Command decided to force the city to surrender by shelling it from artillery weapons alone. In this they were successful. Esad -pasha, who commanded the defense of Skadar, offered acceptable terms for the surrender of the city, and Montenegrins troops marched into Skadar on April 24. However, this solved nothing. On the contrary, the big powers only intensified their interference. Fierce diplomatic pressure was brought to bear on King Nikola who found in impossible to resist without risking a suicidal war. Kind Nikola communicated his decision to leave Skadar to the English Foreign Minister Mr. E. Gray, saying in effect that his dignity and the dignity of his people would not permit him to submit to pressure and was therefore reposing the fate of the city of Skadar in the hands of the Great Powers. After this communication, a treaty on the surrender of Skadar was signed and international troops marched into the city on May 14.

Montenegro's losses in the First Balkan War were 9.500 dead and wounded. In the Second Balkan War, which erupted between erstwhile allies, Montenegro took the side of Serbia: on July 10, 1913, King Nikola declared war on Bulgaria and sent the Decani Force, numbering 13.000 troops, to Macedonia to assist the Serbian Army. Sending the detachment off on its mission, King Nikola exported them to do their duty in the "Defense of our Serbian interests". The detachment lost 950 dead and wounded.

The Balkan Wars proved favorable to Montenegro, which expanded its territory by and additional 5.000 square kilometers, to total 14.442 square kilometers. In annexed the towns of Mojkovac, Bijelo Polje, Pljevlja, Berane, Plav, Gusinje, Rozaj, Pec, Djakovica and Tuzi and a part of Lake Skadar.