From its 1823 inception, the new federation (the United Provinces of Central America) faced a series of ultimately unresolvable problems. Instead of engendering a spirit of unity, Spanish rule had fostered divisions and local suspicions. In the case of Honduras, this divisiveness was epitomized by the rivalry between Tegucigalpa and Comayagua. There was even some sentiment for admitting these two cities as separate provinces within the federation, but that proposal was ultimately rejected. In addition, much of the region was suspicious of Guatemalan ambitions to dominate Central America and wished to retain all possible local authority rather than surrender any to a central government.

At least equally serious was the division of the politically active population into conservative and liberal factions. The conservatives favored a more centralized government; a proclerical policy, including a church monopoly over education; and a more aristocratic form of government based on traditional Spanish values. The liberals wanted greater local autonomy and a restricted role for the church, as well as political and economic development as in the United States and parts of Western Europe. The conservatives favored keeping native people in their traditional, subservient position, while the liberals aimed at eventually eliminating indigenous society by incorporating it into the national, Hispanic culture.

At the time of Central American independence (1823), Honduras was among the least-developed and least-populated provinces. In 1824 its population was estimated at just over 137,000. Despite its meager population, Honduras produced two of the most prominent leaders of the federation, the liberal Francisco Morazán (nicknamed the "George Washington of Central America") and the conservative José Cecilio del Valle. In 1823 del Valle was narrowly defeated by liberal Manuel José Arce for election as the federation's first president. Morazán overthrew Arce in 1829 and was elected president of the federation in 1830, defeating del Valle.

The beginning of Morazán's administration in 1830 saw some efforts to reform and promote education. Success was limited, however, because of lack of funds and internal fighting. In the elections of 1834, del Valle defeated Morazán, but del Valle died before taking office, and the legislature offered Morazán the presidency. With clerical support, a conservative uprising began in Guatemala in 1837, and within a year the federation had begun to dissolve. On May 30, 1838, the Central American Congress removed Morazán from office, declared that the individual states could establish their own governments, and on July 7 recognized these as "sovereign, free, and independent political bodies."

Data as of December 1993