Cultural diplomacy and cultural propaganda have been discussed by some scholars of British diplomatic history, but it is not clear what degree of influence these activities had upon the mainstream of diplomacy. This article attempts to explore the importance of cultural diplomacy for Britain in the first half of the twentieth century, including the world wars, by looking at the cases of British policy towards Italy and the United States. It begins by looking at Sir James Rennell Rodd, the British ambassador to Italy between 1908 and1919, who used his cultural diplomacy in order to persuade Italy to join the Allied side during the First World War. He helped to create the British Institute in Florence, which in 1917 came under the Ministry of Information (MOI) as part of the British propaganda effort. Once the war ended the MOI was dissolved, partly because the Foreign Office disliked its aggressive propaganda activities towards foreign countries. However, when it became apparent that Fascist Italy and Nazi Germany, which were more advanced in the field of political and cultural propaganda, were using cultural diplomacy to increase their influence in the world, the Foreign Office reluctantly had to organize some form of propaganda to counter their activities. This led to the establishment of the British Council in 1934, which was, in part, loosely modeled upon the British Institute in Florence. It attempted to concentrate upon purely cultural activities, but with another war approaching this line was breached and the Director, Lord Lloyd, increasingly used the Council for political propaganda and intelligence-gathering. The greatest challenge came in the United States where British propaganda had to avoid the excesses of the First World War and yet still promote Britain`s cause. In this environment the Council`s cultural propaganda became useful by emphasizing the common ethnic and cultural roots of the two countries. In addition, the Council proved useful in the post-war period as its activities could be used to promote democratic values and thus encourage other countries, such as Italy and Greece, to move away from both fascism and communism. This article therefore demonstrates the importance of cultural diplomacy and how it contributed to the mainstream of British diplomacy.