The revival of Brunei after centuries of seemingly-irreversible decline, dates from January 1906, when Mr MSH McArthur assumed office as the first British Resident in the Sultanate. In this study it will be shown hoer a moribund, bankrupt and isolated backwater, troubled by internal disaffection and living under a Brooke 'sword of Damocles', was regenerated by more enlightened British administration, coupled later with the fortuitous discovery of petroleum, into a peaceful, flourishing and prosperous little State, the 'Shangri-la of the East'. Originally the initiative rested firmly with the imperial powers but after the Second World War the balance shifted towards an increasingly literate and healthy local population. British administrators, instead of initiating policy (as formerly) found themselves obliged increasingly to react to demands made upon them by an emerging Brunei nationalist movement led by the charismatic Sheikh Azahari. In the end, however, it was the monarchy which was most strengthened during the Residential Era; and it was overwhelmingly to the crown, rather than to the people, that power was transferred when Brunei regained internal autonomy on 29 September 1959