The angle began when Vince McMahon's son, Shane McMahon, announced on Raw that he (kayfabe) bought out the outside promotions right out from under his father's nose. This led to several run-in appearances of outside wrestlers during Raw and SmackDown! over the months after WrestleMania X-Seven.
As part of its plans, Lance Storm became the first outside wrestler to appear on WWF programming, by making a run-in during a match on the May 28 episode of Raw. Hugh Morrus made his WWF debut on the June 4, 2001 episode of Raw attacking Edge. At King of the Ring on June 24, Booker T interfered during the Triple Threat Main Event match for the WWF Championship and almost cost Steve Austin the title. Additionally, Austin suffered fractured bones in his hand from the side slam he took from Booker into an announce table. The next night on Raw, which was held in New York City's Madison Square Garden, a confrontation occurred between Shane McMahon and WWF owner Vince McMahon. While Vince was in the ring, Booker T came from behind to deliver a scissor kick to Vince. The WWF roster ran to the ring to aid Vince, but Booker T and Shane McMahon escaped through the crowd. This incident marked the official start of the Invasion storyline; Raw commentator Jim Ross announced, "The battle lines have been drawn!".
During a match between Buff Bagwell and Booker T, WWF wrestlers Kurt Angle and WWF Champion Steve Austin interfered in retaliation by beating Booker T up, with Bagwell joining Angle and Austin by attacking Booker T. This match did not go over well at all with the audience in attendance at the Tacomadome.
On July 9 on Raw, Kane was scheduled to face Mike Awesome and Lance Storm in a handicap match. Chris Jericho came out and offered to be Kane's partner, thus turning it into a tag team match. Near the end of the match, Jericho applied the Walls of Jericho on Lance Storm. As the move was being applied, however, Rob Van Dam and Tommy Dreamer ran through the audience and into the ring and started to beat on Kane and Jericho. In response, WWF wrestlers consisting of The Dudley Boyz, Tazz, Justin Credible, Rhyno, and Raven ran to the ring. After a brief stand-off, the WWF cavalry turned around and attacked Kane and Jericho. This prompted Paul Heyman to leave the announce table and enter the ring. After high-fiving the wrestlers, he announced that ECW has been brought into the Invasion. Heyman then announced, "This Invasion just got taken to the extreme."
Later during the night, Shane and Vince McMahon bumped into each other backstage. Shane told his father that ECW needed to be taken care of and pointed out that there were 10 ECW wrestlers under Heyman's belt. He suggested that he would take five of his outside wrestlers and have them team up with five of Vince McMahon's WWF wrestler's later that night to take out ECW. Vince would agree.
At the end of the night, the outside wrestlers came into the ring, accompanied by Shane McMahon. The WWF wrestlers then came into the ring and, before ECW entered, the outside and WWF wrestlers started to brawl. The WWF wrestlers cleared the ring but then were stormed by the ECW wrestlers and taken out. After this, Shane's men came into the ring and high-fived the ECW men. Paul Heyman and Shane McMahon then hugged and started to dismantle the WWF wrestlers. Vince McMahon, stunned, came out and asked what was going on. Shane McMahon responded that he was responsible for all the events that just transpired and announced that ECW and his men merged to form The Alliance. He then announced that the new owner of ECW was Stephanie McMahon.
Steve Austin, who had turned heel at WrestleMania and formed an alliance with McMahon when he helped Austin win the WWF Championship, took a change in character during this time. Instead of being a beer-drinking redneck, he was more emotional and tried to cheer-up Vince McMahon, who was clearly stressed from the threat of The Alliance, by doing something generous like giving Vince a cowboy hat as a present. During a July 12 SmackDown!, Austin played "Kumbaya" and "We Are The Champions" for McMahon, to which Vince was unresponsive. Later that night, Vince McMahon came out and asked Austin to come to the ring, announcing him as the man that would lead Team WWF into the pay-per-view and into victory. Upon entering, Vince McMahon told Austin that he had changed quite a bit since WrestleMania, and when the WWF goes up against The Alliance at the upcoming pay-per-view, he did not need an Austin that gave him hugs and gifts and baked him cookies. He needed the "old" Stone Cold who was a "beer-swilling, foul-mouthed SOB" and the "old" Stone Cold that "didn't take anything from anyone." He asked Austin to knock him down, to the crowds pleasure. Austin, however, shook his head and proceeded to leave the ring, turning his back on Vince McMahon. Later that night when Diamond Dallas Page and Shane McMahon went up against the Undertaker and Kurt Angle, many members of the Alliance interfered. Kane and Jericho came to help their team, but the Alliance's numbers were too many, and without Austin to back up his teammates, Team WWF was overwhelmed.
On the July 16 edition of Raw, Austin was shown drinking and playing pool at a bar downtown. During the night, Vince McMahon held a WWF meeting backstage. Undertaker and the APA gave a motivational speech on how they should not tolerate the Alliance any longer. After they were finished, Brooklyn Brawler wheeled Freddie Blassie into the room so he could address the wrestlers and pump them up for the night. As the WWF wrestlers united, Austin could be seen watching the events on the television at the bar. He proceeded to slam his cue stick on the pool table and left.
Later that night, DDP and Rhyno faced Kane and the Undertaker. During the match, there was interference from the Alliance. In response, The Hardy Boyz, the APA, Jericho, and Kurt Angle came to help their WWF allies, but more Alliance members came in and overwhelmed the WWF wrestlers. Backstage, many WWF and Alliance wrestlers were fighting each other, and the WWF seemed to be on the losing end of things. A truck was seen driving up to the arena, however, and Austin came out with his cue stick and proceeded to beat down any outsiders and ECW wrestlers in his path. He then came to the ring, trash-talking on the way down, and beat down the Alliance wrestlers, giving Stunners to most of the men in the ring. The WWF wrestlers had cleaned house and were standing tall. The WWF seemed to be in good shape for the upcoming pay-per-view with Austin's return.
At InVasion, the Inaugural Brawl took place between Team Alliance and Team WWF. Team WWF consisted of Steve Austin, Kurt Angle, Chris Jericho, Kane, and the Undertaker, who all squared off against the team of DDP, Booker T, Rhyno, and the Dudley Boys. Near the end of the match, all of the wrestlers were outside of the ring except Booker T and Angle. Kurt Angle applied the ankle lock on Booker T, who tapped out, but no referee was there to witness it. Austin then dragged a referee into the ring, but in a swerve, kicked Kurt Angle in the stomach, hit him with a Stunner, and placed Booker T on top of Kurt Angle and told the referee to count. Team Alliance won the match due to Austin's betrayal of the WWF.
The next night, Austin claimed he joined the Alliance because they appreciated him. He cited Vince's hugging of Angle and calling The Rock on the phone as signs that Vince did not appreciate Austin and accused McMahon of grooming Angle to be the next WWF Champion.
Shane McMahon, on the July 26 edition of SmackDown!, extended an invitation to The Rock, who had not been seen since the Raw following WrestleMania X-Seven, to join the Alliance. Also that night, Kurt Angle challenged Booker T to a World Heavyweight Championship match, which Booker T accepted. The WWF gained momentum when Angle made Booker T submit with an ankle lock, taking the championship away from the Alliance. Angle's title run proved to be short-lived, as Booker T won it back on the July 30 episode of RAW.
On that same Raw at the First Union Center in Philadelphia, The Rock returned for the first time since his kayfabe suspension on the April 2 edition of Raw (In reality, he was given the "suspension" to film The Scorpion King). Shane, Stephanie, and Vince McMahon were in the ring that night, trying to convince The Rock to join them. Shane reminded The Rock of how Vince screwed him out of the WWF Championship earlier that year at WrestleMania and also in a steel cage match the day after WrestleMania. Vince conceded that it was wrong for him to back Austin, as he was a rattlesnake that he should have known would eventually bite him. He promised The Rock that he had no intention of screwing him if he returned to the WWF but also noted that he could not promise that he never would; if it was good for business, he said, then he just might do it. He told The Rock that he was at least being honest with him and pleaded for The Rock to trust himself, stating that his future was with the fans and the WWF. The Rock gave Vince a Rock Bottom after some bickering between Shane and Vince, and proceeded to stare down Shane, then smile cheekily and shake Shane's hand, faking a defection to the Alliance and a heel turn - but he then proceeded to Rock Bottom him as well and give him a People's Elbow, before emphatically asserting, "Finally, the Rock has come back... to the WWF," thus aligning himself with the World Wrestling Federation.
His return led to a title match between The Rock and Booker T at SummerSlam 2001, which The Rock won, marking the second time the World Championship belt changed sides to the WWF. At that same pay-per-view, Austin retained his WWF Championship against Angle after Angle won by disqualification.
The following Raw and SmackDown! showings featured primarily interpromotional matches between the two companies. Austin stole Kurt Angle's medals during one of the shows, and on the August 30 edition of SmackDown!, tied them to a cinder block and threw them in a river. The following Raw, Debra and Stephanie bought a new truck for Austin, but Angle came up from behind and nailed Austin in the back of the head with a pipe. He put a cinder block and rope in the truck, put Austin in it, and drove away on the truck. He blindfolded Austin and threatened to throw him into a river if he did not get a title shot. Austin, fearful for his life, "broke down in tears" and agreed to give Angle a title shot at the upcoming pay-per-view, Unforgiven. Angle said, however, that Austin was "still going into the water", but instead simply embarrassed Austin by throwing him into a kiddie pool.
The WWF gained even more momentum at Unforgiven, as The Rock retained the World Championship in a handicap match against Booker T and Shane McMahon, and Kurt Angle made Austin submit to the ankle lock, winning the WWF Championship from Austin, putting both belts into the hands of the WWF.
Almost every other championship had changed hands during this period of time, being exchanged between WWF Superstars and Alliance members. For example, The Undertaker and Kane beat Diamond Dallas Page and Chris Kanyon in a Steel Cage Match at Summerslam to become the holders of the WWF Tag Team Titles. Also, X-Pac beat Billy Kidman to become double champion of WWF Light Heavyweight Champion as well as Cruiserweight Champion.
There were several interpromotional matches after Unforgiven. Furthermore, a crucial plot point formed when, on the October 8 airing of Raw, Jericho and The Rock teamed up against Shane McMahon and Rob Van Dam. During the match, Jericho mistakenly struck The Rock with a steel chair, costing them the match. The Rock confronted Jericho backstage after the match, leading to a brawl between the two. The two of them began a feud, although they often tagged together, had similar gimmicks of hurling comedic insults at Stephanie McMahon, and at one point won the WWF Tag Team Championship.
Also that night, Steve Austin and Kurt Angle faced off for the WWF Championship, and then-WWF Commissioner William Regal, who sat at ringside to ensure a fair match would take place, hit Kurt Angle with the belt, thereby backstabbing the WWF and costing Angle the title. On the following SmackDown!, Linda McMahon promptly fired Regal from his position as WWF Commissioner, and named Mick Foley as his replacement. Regal was then declared the Commissioner of the Alliance by Shane and Stephanie.
The feud between Jericho and The Rock built up to a match at No Mercy on October 21, where Jericho beat the Rock to win the World Championship (Jericho's first world title), and Steve Austin defeated Angle and Rob Van Dam to retain his WWF Championship.
On the October 29 edition of Raw, Shane McMahon told his father, Vince McMahon, that a member of the WWF would jump ship to the Alliance that night. Later that same night, Kurt Angle backstabbed the WWF by hitting Jericho, The Rock, Undertaker, and Kane with steel chairs. On the November 1 edition of SmackDown!, Angle, who originally led the WWF wrestlers, explained that he represented what is great about America—he was a winner, and his defection came from his decision to fight along the winning side. That side included Steve Austin, a man Angle claimed knew how to win.
On the November 5 airing of Raw, Vince McMahon countered Kurt Angle's defection by stating that a member of Team Alliance would defect during a match at the upcoming Survivor Series. Steve Austin came out to confront Vince about it, and Vince stated that Austin would be the one to defect. Because of this announcement, many Alliance members began to distrust Austin, who vehemently denied the charges and called Vince a liar. Stone Cold went on to interrogate members of Team Alliance, questioning Booker T and sitting Rob Van Dam down in a room with a light shining on him. That same night The Rock won the World Title from Chris Jericho, but Jericho assaulted The Rock in the ring following the match.
All of this led to a "Winner Take All" match at Survivor Series 2001, which pitted Team WWF (The Rock, Chris Jericho, The Undertaker, Kane, and The Big Show) against Team Alliance (Steve Austin, Kurt Angle, Booker T, Rob Van Dam, and Shane McMahon). The final three men in the match were The Rock and Jericho vs. Austin. Jericho was eliminated and, to continue the feud between the two men, attacked The Rock with a Breakdown, even though Jericho's future was on the line if The Rock lost. The Rock and Austin continued to battle it out,each stealing and reversing their signature maneuvers and the referee was knocked down in the match. Austin Stone Cold Stunnered the Rock and pinned him, but there was no referee to count it. Austin approached the downed referee to try to revive him. As this was occurring, Angle ran to the ring, picked up the WWF championship belt, and nailed Austin with it, revealing himself to be the defector to which McMahon was referring to the entire time. The Rock got up to his feet and followed this with a Rock Bottom and a pin on Austin, to which the referee woke up and groggily counted the three count. Team WWF prevailed, thus ending the storyline.
It was also on this night that several titles were unified; Edge defeated Test to unify the United States Championship and the Intercontinental Championship, while The Dudley Boyz beat The Hardy Boyz in a Steel Cage match to win the WWF Tag Team Titles.