In 1894, the French Army's counter-intelligence section, led by Lt. Col. Sandherr, became aware that new artillery information was being passed to the Germans by a highly placed spy most likely to be in the General Staff. Suspicion quickly fell upon Captain Alfred Dreyfus, a Jewish officer, who was arrested for treason on October 15, 1894. On January 5, 1895, Dreyfus was summarily convicted in a secret court martial, publicly stripped of his army rank, and sentenced to life imprisonment on Devil's Island in French Guiana.
In August 1896, the new chief of French military intelligence, Lt Colonel Picquart, reported to his superiors that he had found evidence to the effect that the real traitor was a Major Ferdinand Walsin Esterhazy. Picquart was silenced by being transferred to the southern desert of Tunisia in November 1896. When reports of an army cover-up and Dreyfus's possible innocence were leaked to the press, a heated debate ensued about anti-Semitism, France's identity as a Catholic nation and a republic founded on equal rights for all citizens. On September 19, 1899, following a passionate campaign by his supporters, including leading artists and intellectuals like Emile Zola, Dreyfus was pardoned by President Émile Loubet in 1899 and released from prison. He had been subjected to a second trial in that year and again declared guilty of treason despite the evidence in favor of his innocence. Dreyfus, however, officially remained a traitor in a French court of law and pointedly remarked upon his release:
"The government of the Republic has given me back my freedom. It is nothing for me without my honor."
During that time, he lived with one of his sisters at Carpentras, and later at Cologny.
On July 12, 1906, Dreyfus was officially exonerated by a military commission. The day after his exoneration, he was readmitted into the army with a promotion to the rank of Major ("Chef d'Escadron"). A week later, he was made a Knight of the Legion of Honour, and subsequently assigned to command an artillery unit at Vincennes. On October 15, 1906, he was placed in command of another artillery unit at Saint-Denis.
Dreyfus was present at the ceremony removing Zola's ashes to the Panthéon in 1908, when he was wounded in the arm by a gunshot from Louis Gregori, a disgruntled journalist, in an assassination attempt.