This article examines the consequences for Sweden’s state identity by the decision of Finland and Sweden to apply for membership in NATO. Taking its starting point in Sweden’s shattering loss of its easternmost provinces in the 1809 Treaty of Fredrikshamn, it explores Sweden’s initial formulations of a policy of neutrality and its evolution until the end of the Cold War. The article then directs attention to how Social Democratic leaders managed to institutionalise a Swedish “active foreign policy”, exerting a lasting, formative influence on Sweden’s state identity. It also addresses the rapprochement of Finland and Sweden after the end of the Cold War and the consequences of the bilateral dynamics that characterised their EU-membership applications. The article critically discusses how Sweden reformulated its concept of neutrality into a nebulous concept of nonalignment and adopted a security policy rooted in a cooperative security approach. Based on key findings drawn from this historical account, this article addresses the processes that lead to Finland and Sweden unexpectedly deciding on jointly applying for NATO membership. It concludes with a forward-looking assessment of how a Swedish NATO membership will ultimately stabilise Sweden’s adaptable state identity and its implications for the Nordic countries’ regional military strategy.