The major event that reshaped European borders after World War I was the signing of the Treaty of Versailles in 1919. This treaty officially ended the war and imposed significant territorial and financial penalties on Germany. It led to the dissolution of empires, including the Austro-Hungarian Empire and the Ottoman Empire, resulting in new countries being formed in Central and Eastern Europe. The treaty also established the League of Nations in an attempt to maintain peace. However, the harsh terms contributed to economic instability and nationalist sentiments, ultimately setting the stage for World War II.