Thus united, Ala Mhigo was raised mainly by Highlanders. Seeing as it was right on the land bridge leading into Ilsabard, they made sure that Ala Mhigo was a mighty bastion capable of repelling foreign invasion. Their military might being one of the few things they could export led to Ala Mhigan sellsword companies springing up in nearly every city-state to be used in their conflicts against one another. Unfortunately, Ul'dah's trade empire (with many ships) considerably undermined their ability to charge tolls on traders coming through the secure land bridge (1190).
Hoping to claim fertile land by conquest, King Manfred attempted to conquest the Black Shroud (1468), almost crushing the Gridanian forces before being driven back by a fledgling alliance of Eorzean city-states rallied by Ishgard, knowing that should Gridania fall the Ala Mhigans would be at their gates (and the already had the Dragonsong War to contend with). This would come to be known as the Autumn War (1469).
In the austerity that came after the wars, dissatisfaction with the crown swelled. The Fists of Rhalgr - the monks - gained considerable political influence. To forestall the erosion of the monarchy, the Fists were declared the state religion and given great influence. For at time this enmeshing of religion and state indeed led to stability, but King Theodoric would try to sever their influence (1546). He would declare himself above Rhalgr, ordained by the Destroyer's master, Nymeia. But this was simple pretense; when they Fists of Rhalgr protested, he brutally crushed them; all in temple, be they priest or refugee, burned (1552).
Growing paranoid, Theodoric's rule became more and more tyrannic. The executions began with rival claimants to the throne and moved ever downwards towards even smallfolk of any noteworthy wealth. His fears were only confirmed when even the queen turned against him, a conspiracy betrayed by a single noble. The brutality spurred the people to action, overthrowing their leader in a "popular revolution" defied not even by the king's own guard, the Corpse Brigade.
Unfortunately for the people, the rising tensions and violence had been encouraged from the shadows; gentle manipulations by spies of the Garlean Empire loyal to Gaius van Baelsar. As soon as Theodoric had been slain, the Imperial army sprung their trap, taking the city without a great battle or siege. Any who did not surrender or join the Resistance fled.
You can learn the nitty-gritty about Autumn War, the Fists of Rhalgr, and the fall of Ala Mhigo from Erik at the Pugilists' Guild.