The Principality of Monaco is a sovereign and independent state, linked closely to France by the Treaty of July 1918, which was formally noted in Article 436 of the Treaty of Versailles of 1919. The foreign policy of Monaco is one illustration of this accord: France has agreed to defend the independence and sovereignty of Monaco, while the Monegasque Government has agreed to exercise its sovereign rights in conformity with French interests. Since then, the relations between the sovereign states of France and Monaco have been further defined in the Treaty of 1945 and the Agreement of 1963.

In 2002, Monaco renegotiated its 1918 treaty with France. In 2005 it was ratified by both parties and entered into force. The terms of the treaty:

Upgrade France's representation in Monaco from Consulate General to that of an embassy;
Permit, for the first time, other countries to accredit ambassadors to Monaco; and
Formally recognize the succession scheme set out in the 1962 Constitution, which extends eligibility to the Prince's daughters and other family members.

Although not a member of the European Union (EU), Monaco is closely associated with the economic apparatus of the EU through its customs union with France and its reliance upon the euro as its official currency.

Monaco has 10 diplomatic missions in Western Europe and permanent representation at the United Nations and the Council of Europe. It maintains honorary consulates in 106 cities in 45 countries. Seventy-four countries have consulates general, consulates, or honorary consulates in or accredited to Monaco.