The beginning of 1976 saw a series of gruesome sectarian murders in south Armagh, which led the British to announce they were sending the SAS to the area - despite a request from the Government in Dublin for more information before they did so. Meanwhile, the British also considered radical measures to fight cross-Border terrorism.
In February, IRA hunger striker Frank Stagg died in prison in Britain. His family was split over whether or not he should have an IRA funeral - leading to a struggle between the Government and Republicans over his remains.
The Government was always suspicious about British Prime Minister Harold Wilson's long-term plans for the North - and about talks between British officials and the Republican movement. Newly released documents show they were right to be worried - but that the situation changed when Jim Callaghan took over as Prime Minister.
In July, the British Ambassador, Christopher Ewart Biggs, and a civil servant, were killed by an IRA roadside bomb in county Dublin. The assassination led to the introduction of new emergency powers - which in turn raised fears about tactics used by the Gardai.
The biggest crisis to hit relations between Government and the Presidency erupted when Defence Minister Paddy Donegan called the President a "thundering disgrace" - and Taoiseach Liam Cosgrave refused to accept his resignation, prompting the President to leave office.
The Irish economy was slowly beginning to recover from the crisis caused by the Oil Price shock of 1973 - but there were still tensions around the Cabinet table as Finance Minister Richie Ryan struggled to control public spending.