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The notorious US-trained National Guard has crumbled and its surviving commanders are negotiating a surrender.
In the last six weeks Sandinista fighters have gained control of 27 cities around the capital as well as the southern part of Nicaragua that borders Costa Rica.
President Anastasio Somoza Debayle - the third member of the Somoza dynasty to rule Nicaragua since 1937 - has fled to the United States.
This evening he abandoned the battle-torn capital with about 45 other people in five planes that landed at Homestead US Air Force base near Miami, Florida.
Earlier, he had presented his resignation to the Congress and handed over to the chairman of the lower house, Francisco Urcuyo, who is now caretaker president.
Mr Urcuyo has declared the Sandinistas will have no part in his new government and demanded they lay down their arms.
But the Sandinista-backed provisional government currently based in the city of Leon is expected to force Mr Urcuyo to resign.
Seven years of war
The Sandinistas, named after Nicaraguan resistance leader Augusto Cesar Sandino, was set up in 1962 by Carlos Fonseca Amador, Silvio Mayorga and Tomas Borge. For the last seven years they have waged a civil war against the Somoza government.
Fighting has been at its most intense in the last two months and thousands have been killed and about half a million left homeless.
Last year, the assassination of the leader of the opposition Democratic Liberation Union, Pedro Joaquin Chamorro, triggered a general strike and brought together moderates, the Roman Catholic Church and the Sandinistas in a united front against Mr Somoza
The Americans have long supported the Somoza regime but realising that the Sandinista rebels had the upper hand in the war, US officials have spent the last few weeks trying to persuade President Somoza to step down assuring him that his Liberal Party and the National Guard would survive.
Last week, William Bowdler, a special American envoy, began talks with members of the provisional government asking them to enlarge the junta by including representatives of the National Guard and Liberal Party. His request was rejected.
President Urcuyo fled to Guatemala the following evening and the Sandinistas established a revolutionary government two days later on 20 July.
Led by Daniel and Humberto Ortega, they published a guarantee of civil rights and appointed a council of state, prior to an elected national assembly and a new constitution.
General Somoza was killed in a gun and bomb attack on him in Paraguay in September 1980.
In November that year, Ronald Reagan was elected US President and Nicaragua's relations with the US deteriorated rapidly.
The Reagan administration tried to destabilise Nicaragua's left-wing government by supporting the counter-revolutionary forces, the Contras.
Total US aid to the Contras was $300 million.
Covert Central Intelligence Agency operations, including the mining of Nicaraguan harbours in 1984, were condemned by the International Court of Justice in 1986.
The Sandinistas won a decisive victory in 1984 elections and Daniel Ortega was made president.
In 1988 the Nicaraguan leadership held talks and signed a peace agreement with the Contras.
But in elections two years later, a US-backed centre-right National Opposition Union defeated the Sandinistas, ending their decade-long spell in power.
The US lifted its economic embargo in March. By the end of June 1990 the Contra rebel army had been disbanded.
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