When Reagan became President he had only one well-defined foreign policy goal: containing the Soviet Union, or the "evil empire" as he once referred to it. He primarily wanted to stop the USSR from growing larger (as it tried to do when it invaded Afghanistan in 1979) and to keep other non-Communist countries from becoming Communist. He disliked the decade-long Detente begun by President Nixon and continued by President Ford intended to ease relations with the Soviets. Reagan firmly believed that the USSR was using Détente and the SALT talks to take advantage of the United States. The "window of vulnerability" was fast approaching, Reagan insisted, when Moscow would be able to launch a preemptive first strike against Washington and destroy the US nuclear defensive systems.

For this reason, Reagan reasoned that the US needed to prepare its military defense systems for this onslaught. He believed that only through military preparedness could the world achieve a stable peace. His Secretaries of State, General Alexander Haig and George Schultz, as well as his Secretary of Defense Caspar Weinberger, among others, assisted Reagan in developing this Cold War strategy. During Reagan's two administrations, the US military increased to unprecedented peacetime levels. The administration also spent billions of dollars on defense contracts to research and develop new weapons and military technology. The military increased production of nuclear arms and deployed them throughout the Western world. The exorbitant amount of money Reagan spent on defense contributed to the enormous national deficit during the 1980s.

The most notorious of the programs Reagan invested in was the Strategic Defense Initiative (SDI), more commonly known as the Star Wars program in reference to the popular 1980s science fiction film trilogy. The SDI was designed to be a national defense network of missiles that could target and destroy any incoming enemy missiles before they reached the United States. Unfortunately, Star Wars was mostly a fantasy–prototypes of the seek-and- destroy technology often failed the trial runs miserably. Worse still, SDI's estimated price tag totaled nearly $1 trillion dollars, a figure that concerned many Democrats and American citizens during a decade of recession. Many Americans also feared that Reagan's conservative, Cold War ideology would only lead to war. In 1982, 800,000 Americans rallied in New York City to press the administration to stop creating more nuclear weapons. Reagan denounced these protestors as peace-loving "doves" and continued developing the US weapons arsenal.

Reagan couldn't ignore these "doves" completely, however. The political cost of ignoring millions of Americans was too great, especially for a first term president possibly seeking reelection. To appease those who disliked his defense programs, Reagan initiated START, or the Strategic Arms Reduction Talks, with the Soviet Union in mid 1982. Not surprisingly, these talks quickly failed because the language of the talks demanded that the USSR significantly reduce its nuclear arsenal, but allow the US to continue building its arsenal.

The surprise did come in 1985, though, when Mikhail Gorbechev became the leader of the Soviet Union and actively sought both political and economic reform in the USSR as well as an easing of tensions between the United States and the Soviet Union.

For the first time since the beginning of the Cold War, a Soviet leader approached the United States to seriously discuss a possible peace. This initiative took the Reagan administration completely by surprise, but Reagan quickly responded in kind. Numerous summits between top Soviet and American officials were held during Reagan's second term. Eventually, even Gorbechev and President Reagan themselves sat together in both Washington and Moscow on a number of occasions to hammer out agreements. Many concessions were made on both sides: in 1987 Gorbechev agreed to withdraw most of its nuclear arsenal and troops from the Soviet-controlled states in Eastern Europe and to withdraw from Afghanistan while Reagan eventually abandoned his Star Wars plans and agreed to reduce the number of American nuclear weapons. Gorbechev initiated so many reforms that within three or four years after Reagan left office, the Soviet Union collapsed and disintegrated into individual states, effectively ending the Cold War.

Despite America's blossoming relationship with Soviet Russia during Reagan's second term, the President still had to deal with many issues elsewhere in the world, namely in the Middle East and Latin America. In the 1980s, US relations with many states in the Middle East were contentious at best, primarily because Reagan continued to pledge support for the fledgling Jewish state of Israel at the expense of the many Muslim Palestinians living in the region. Almost every other Middle Eastern state opposed the existence of Israel and supported the Palestinian Liberation Organization, or PLO, headed by Yasir Arafat. When Israel attacked the PLO headquarters in Beirut, Lebanon, in 1982, President Reagan dispatched several thousand US Marines to the country to serve as peacekeepers. In retaliation, a pro-Palestinian suicide terrorist bombed the US Embassy in Beirut and killed 239 Marines. The US immediately retreated.

President Reagan did not back down from the Libyan terrorist attack on US forces in Germany, however. Libya, too, disliked American involvement in the Middle East and funded many terrorist organizations that pledged to destroy the United States. After learning of the attack in Germany, Reagan launched a missile campaign on Libya, and even bombed the personal residence of Libya's ruler, Muammar Qaddafi. Qaddafi survived the attack, but backed away from anti-American terrorist movements.

The Reagan administration also became heavily committed in various hotspots throughout Latin America, particularly in those areas where the fight against Communism still raged. Throughout his first term in office, the federal government under Reagan financed anti-Communist guerillas and politicians in the small state of El Salvador. Reagan also sent 10,000 US troops to the island of Grenada in 1982 to combat the few hundred village warriors who tried to overthrow the government and establish a Socialist state. As soon as the American soldiers arrived, the conflict was over in a few hours. Surprisingly, the American public strongly approved of Reagan's decision to send in the US Army. Reagan sent the troops just two days after the 239 Marines in Beirut had died, and an American victory in Latin America only boosted public spirits. Furthermore, the media ran footage of rescued American hostages in Grenada that increased support for the invasion.

Reagan's primary concern in Latin America, though, was Nicaragua. In 1979, President Carter had supported the Socialist Sandinista movement when it overthrew Nicaragua's dictator. Reagan, however, vehemently opposed the Sandinistas's claim to power and the organization's Communist ties. In 1981, Reagan authorized the Central Intelligence Agency to train an army of 10,000 Nicaraguan "freedom fighters," or Contras, to fight the Sandinistas.

Congress quickly became outraged and worried that Reagan might inadvertently lead the US into another horrible anti-Communist war in Nicaragua as Kennedy and Johnson had in Vietnam. Congress passed the Boland Amendment to ban US assistance to the Contras for the next several years. Nevertheless, the Reagan administration ignored the order and secretly continued to support the Nicaraguan Contras. The US Navy mined the harbors surrounding Nicaragua and destroyed the nation's oil reserves. The administration ordered Lieutenant Colonel Oliver North to continue covert fundraising efforts to help the Contras. Over $30 million was sent into the country. Ironically, a large portion of that money actually came from Iran, one of the US's most dangerous enemies: Colonel North agreed to sell Iran several million dollars worth of weapons in exchange for hostages held in Lebanon by Iranian agents.

American citizens were outraged when the arms-for-hostages deal was eventually leaked to the media in 1987. Not only had the administration disobeyed Congress, but it also had traded arms to the nation that freely announced its hatred of the United States. Congress launched numerous investigations to uncover the truth in the Iran-Contra scandal. Some of them even lasted for several years after Reagan left office. Many were indicted and convicted for involvement in the scandal, including Lieutenant Colonel North. Although most historians believe Reagan himself authorized North and others to raise money and send arms to Iran and the Contras, no direct evidence was ever found to link him to the scandal, and he therefore escaped indictment.

Even though many often remember Reagan for his pledge to fight Communism throughout the world, history indicates that his foreign policy achievements not always honored that pledge. True, Reagan did increase the size of the military, spent billions on national defense, and fought Communists in Latin America. Yet, more cordial relations with the USSR, arms reductions, and a shift away from anti-Soviet policies characterized Reagan's second term in office.