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After Eisner's USPD had lost the elections, he decided to resign from his office. On 21 February 1919, as he was on his way to parliament to announce his resignation, he was shot dead by the right-wingnationalistAnton Graf von Arco auf Valley, who had been rejected from membership in the Thule Society because of Jewish ancestry on his mother's side. This assassination caused unrest and lawlessness in Bavaria, and the news of a left-wing revolution in Hungary encouraged communists and anarchists to seize power.
His government members were not always well-chosen. For instance, the Foreign Affairs Deputy Dr. Franz Lipp (who had been admitted several times to psychiatric hospitals), declared war on Switzerland over the Swiss refusal to lend 60 locomotives to the Republic. He also claimed to be well acquainted with Pope Benedict XV and he informed Vladimir Lenin via cable that the ousted former Minister-President Hoffmann had fled to Bamberg and taken the key to the ministry toilet with him.
On Sunday, 12 April 1919, the Communist Party seized power, with Eugen Leviné as their leader. Leviné began to enact communist reforms, which included forming a "Red Army", seizing cash and food supplies, expropriating luxurious apartments and giving them to the homeless and placing factories under the ownership and control of their workers. Leviné also had plans to abolish paper money and reform the education system, but never had time to implement them.
At the suggestion of Vladimir Lenin, Leviné took hostages from among the elite. On 30 April 1919, eight men, including the well-connected Prince Gustav of Thurn and Taxis, were accused as right-wing spies and executed. The Thule Society's secretary, Countess Hella von Westarp, was also executed.
Soon after, on 3 May 1919, remaining loyal elements of the German army (called the "White Guards of Capitalism" by the communists), with a force of 9,000, and Freikorps (such as the Freikorps Epp and the Marinebrigade Ehrhardt) with a force of about 30,000 men, entered Munich and defeated the communists after bitter street fighting in which over 1,000 supporters of the Munich council government were killed. About 700 men and women were arrested and summarily executed by the victorious Freikorps troops. Leviné was condemned to death for treason, and was shot by a firing squad in Stadelheim Prison. Nazi propagandists later used the actions of the Jewish leadership in the establishment of the Bavarian Council Republic to attack the greater German Jewish community.