The overthrow of Jorge Ubico released a wave of opposition that had been bottled up throughout his rule. Students, professionals and young military officers demanded democracy and freedom. The transformation of Guatemalan politics was so extreme a contrast to previous governments that the handover was dubbed the 1944 revolution . A new constitution was drawn up, the vote given to all adults and the president prevented from running for a second term.

Juan José Arévalo , a teacher, won the 1945 presidential elections with 85 percent of the vote. His political doctrine was dubbed "spiritual socialism" and he immediately set about effecting much-needed structural reforms. Extensive social welfare programmes were introduced: schools and hospitals were built, an ambitious literary campaign launched, the vagrancy law was abolished, and workers were granted the right to union representation and to strike. Some state-owned finces were turned into co-operatives, and there were other policies to stimulate industrial and agricultural development, though land reform was not seriously tackled. Unsurprisingly, these sweeping reforms angered conservative interests (the army, Church leaders and large landowners) and there were repeated coup attempts.

The next president, Jacobo Arbenz , won the election with ease and immediately set out land reform proposals in a direct challenge to the US corporations that dominated the economy. Arbenz enlisted the support of peasants, students and unions to break the foreign dominance and began a series of suits against foreign corporations, seeking unpaid taxes.

In July 1952, the law of agrarian reform was passed, stating that idle and state-owned land would be distributed to the landless. The big landowners were outraged. Between 1953 and 1954, around 8840 square kilometres was redistributed to the benefit of some 100,000 peasant families - the first time since the arrival of the Spanish that a government had responded to the needs of the indigenous population. The United Fruit Company lost about half of its property, provoking the US government to accuse the new Guatemalan government of being a communist beach-head in Central America.

In 1954, the CIA (whose director was on the United Fruit Company's board) set up a small military invasion of Guatemala to depose Arbenz and install an alternative administration more suited to US tastes. A ragtag invasion army of exiles and mercenaries was put together in Honduras and, under CIA supervision, invaded the country, prompting Arbenz to resign after failing to get the support of the Guatemalan military. The US approved a new "government" and flew it to Guatemala aboard a US Air Force plane. Guatemala's experiment with "spiritual socialism" had ended.