North Vietnam defeated the French colonial administration of Vietnam in 1954. Vietnamese Communist Party, led by Ho Chi Minh with its capital Hanoi ruled the North Vietnam. In the South, the French transferred most of their authority to the State of Vietnam, which had its capital at Saigon and was nominally under the authority of the former Vietnamese emperor, Bao Dai.  North Vietnam wished to unify the entire country under a single communist regime modeled after those of the Soviet Union and China. The South Vietnamese government, on the other hand, fought to preserve a Vietnam more closely aligned with the West. US was driven by Cold War concerns about the spread of communism, particularly “domino theory” – the idea that if one Asian nation fell to the leftist ideology, others would quickly follow.

US active combat units were introduced in 1965. By 1969 more than 500,000 U.S. military personnel were stationed in Vietnam. Meanwhile, the Soviet Union and China poured weapons, supplies, and advisers into the North. The war lasted from 1965 to 1973 with South Vietnam and US accepting the defeat. As per the official estimates casualities were 2 million civilians on both sides and some 1.1 million North Vietnamese and Viet Cong fighters. The U.S. military estimated that 250,000 South Vietnamese soldiers died alongwith 58,000 US soldiers in the war.

Vietnam emerged from the war as a potent military power within Southeast Asia, but its agriculture, business, and industry were disrupted, large parts of its countryside were scarred by bombs and defoliation and laced with land mines, and its cities and towns were heavily damaged. A mass exodus in 1975 of people loyal to the South Vietnamese cause was followed by another wave in 1978 of “boat people,” refugees fleeing the economic restructuring imposed by the communist regime. Meanwhile, the United States, its military demoralized and its civilian electorate deeply divided, began a process of coming to terms with defeat in what had been its longest and most controversial war. The two countries finally resumed formal diplomatic relations in 1995.

Reference:

http://www.historyorb.com/day/december/18?p=2

http://www.britannica.com/EBchecked/topic/628478/Vietnam-War

http://news.bbc.co.uk/2/shared/spl/hi/asia_pac/05/vietnam_war/html/introduction.stm