Shortly after the outbreak of World War I, troops of the Russian Empire captured Allenstein in 1914, but it was recovered by the Imperial German Army in the Battle of Tannenberg. The battle actually took place much closer to Allenstein than to Tannenberg (now Stębark), but the victorious Germans, having been defeated in the medieval battle of Tannenberg, named it as such for propaganda purposes.
After the defeat of Germany in World War I, the East Prussian plebiscite was held in 1920 to determine whether the populace of the region, including Allenstein, wished to remain in East Prussia or become part of Poland. In order to advertise the plebiscite, special postage stamps were produced by overprinting German stamps and sold commencing 3 April of that year.
The football club SV Hindenburg Allenstein played in Allenstein from 1921 to 1945. After the Nazi seizure of power in 1933, Poles and Jews in Allenstein were increasingly persecuted. In 1935, the Wehrmacht made the city the seat of the Allenstein Militärische Bereich. It was the home of the 11th Infanterie Division, the 11th Artillery Regiment, and the 217th Infanterie Division.
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