The order of the Brothers of the Sword had conquered Southern Estonia whilst Denmark had taken the North, and the two agreed to divide Estonia, but quarreled over the exact borders. In 1220 the King of Denmark agreed to submit southern Estonian provinces Sakala and Ugaunia that were already conquered by Sword Brethren. Bishop Albert submitted to Denmark the Estonian provinces of Harria, Vironia and Jerwia.

In 1227 the Livonian Brothers of the Sword conquered all Danish territories in Northern Estonia. After their defeat in the Battle of Saule the surviving members of the order merged into the Teutonic Order of Prussia in 1237. On June 7, 1238 the Teutonic order concluded the Treaty of Stensby at a royal fortress in the south of Zealand with the Danish king Valdemar II. According to the treaty Jerwia stayed part of the Ordenstaat and Harria and Vironia were ceded back to King of Denmark as his direct dominion, the Duchy of Estonia. The first Duke of Estonia had been appointed by Valdemar II in 1220, the title was resumed by the kings of Denmark from 1269. Due to its status as the king's personal possession, the Duchy of Estonia was included in a nationwide Danish taxation list Liber Census Daniæ (Danish: Valdemar Sejrs Jordebog) (1220-41), an important geographic and historic document.

The capital of Danish Estonia was Reval (Tallinn), founded at the place of Lyndanisse after the invasion of 1219. The Danes built the fortress of Castrum Danorum at Toompea Hill . Estonians still call their capital "Tallinn", which according to an urban legend derives from Taani linna (Danish town or castle). Reval was granted Lübeck city rights (1248) and joined the Hanseatic League. Even today, Danish influence can be seen in heraldic symbols such as the city of Tallinn's coat of arms being a shield with the Danish cross; and Estonia's coat of arms depicting a similar three lions to the Danish coat of arms.

In 1240 Valdemar II created the Bishopric of Reval but contradictory to canon law reserved the right to appoint the bishops of Reval to himself and his successor kings of Denmark. The decision to simply nominate the holy see of Reval was unique in the whole Catholic Church at the time and was disputed by bishops and the Pope. During the era, the election of bishops was never established in Reval and the royal rights to the bishopric and to nominate the bishops was even included in the treaty when the territoris were sold to Teutonic Order in 1346

First mentioned in 1240, the duchy was locally governed by a viceroy (Latin: capitaneus) appointed by the king and who functioned as his plenipotentiary. The viceroy had administrative powers, he collected the taxes and commanded the vassals and the troops in case of war. Most of the viceroys were either of Danish or Danish-Estonian nationality. In Vironia, the main power centers were Wesenberg (Rakvere) and Narva, built on the site of the old Estonian fortresses of Rakovor and Rugodiv (according to the Old East Slavic chronicles). Wesenberg was granted Lübeck city rights in 1302 by King Erik Menved. Narva received these rights in 1345.

The vassals of the Danish king received fiefs per Dominum utile in exchange for military and court services. The oath of the vassals to a new king had to be sworn by a "year and a day". Most of the vassals , 80% were Germans from Westphalia, 18% were Danes and 2% Estonians (Clemens Esto, Otto Kivele, Odwardus Sorseferæ etc.) The chronicler Ditleb Alnpeke (1290) complains that the king of Denmark accepts Estonians as his vassals. The Danish rule was more liberal in that respect than the reign in the territories conquered by the Brothers of the Sword where no natives were allowed to become lords of fiefs. In 1248, the vassals and burgers of Reval already had a local legislative body ritterschaft.

The Danish army only visited the province occasionally. In 1240-42, Denmark went to war against Novgorod and tried to extend its rule to the land of Votians. King Valdemar sent his sons Abel and Canute to support the campaign of his vassals but did not gain any new territories. The Danish king Erik Plogpennig visited Estonia in 1249 and the Danish fleet sailed to Reval in 1268 and 1270 against Russian and Lithuanian threats.

In August 1332 king Christopher II of Denmark died and Denmark fell into political turmoil. The province in Estonia became split between a pro-Danish party led by bishop Olaf of Reval and the pro-German party led by captain Marquard Breide. After the Estonians of Harria rebelled in the St.George's Night Uprising of 1343 the Teutonic order occupied the territories. The overthrow of the Danish government came 2 days after the Order had defeated the Estonian revolt and the Danish viceroy was imprisoned in cooperation with the pro-German vassals. The castles in Reval and Wesenberg were handed over to the Order by the pro-German party on May 16, 1343 and the castle at Narva in 1345. In 1346 Estonia (Harria and Vironia) was sold for 19,000 Köln marks to the Teutonic Order, the shift of sovereignty from Denmark to the Teutonic Order took place on November 1, 1346.