The Peace of Augsburg was a treaty signed between Charles V, Holy Roman Emperor and the forces of the Schmalkaldic League on September 25, 1555 at the city of Augsburg in Germany.
The effect of the Peace of Augsburg was to establish official toleration for Lutherans in the Holy Roman Empire. According to the policy of cuius regio, eius religio, the religion (Catholic or Lutheran) of a region's prince would be enforced on the population thereof. Some religious choice was offered the people of the empire in that a grace period was given, in which families could choose to move to a principality that favored their faith of choice (Article 24: "In case our subjects, whether belonging to the old religion or the Augsburg confession, should intend leaving their homes with their wives and children in order to settle in another, they shall be hindered neither in the sale of their estates after due payment of the local taxes nor injured in their honour").
Although the Peace of Augsburg was moderately successful in relieving tension in the empire and increasing tolerance, it left important things undone. Neither the Anabaptists nor the Calvinists were protected under the peace: many Protestant groups living under the rule of a Lutheran prince still found themselves in danger of the charge of heresy. (Article 7: "However, all such as do not belong to the two above named religions shall not be included in the present peace but be totally excluded from it.") Tolerance was not officially extended to Calvinists until the Treaty of Westphalia in 1648.
The religious divisions that the Peace of Augsburg created in Germany left it fragmented long after the other great nation-states of Europe (England, France, Austria-Hungary, etc.) were able to unite, thus weakening Germany as a world power until well into the 19th Century. Some historians theorize that it was this delay in unification that led to the extreme German nationalism in the 19th and 20th centuries, leading indirectly to World War One and World War Two.