In the wake of his military victories, Aguinaldo decided that it was time to establish a Filipino government. He had with him when he arrived from Hongkong a draft of a plan prepared by Mariano Ponce for the establishment of a revolutionary government: Consul Wildman, however, had advised Aguinaldo earlier to establish a dictatorial government which later on could be the nucleus of a republican government similar to that of the United States. Probably because the critical times demanded a government with a strong executive, Ambrosio Rianzares Bautista, Aguinaldo's adviser, told him to form a dictatorial government.

Consequently, Aguinaldo made known his intention of establishing such a form of government when he announced, in the morning of May 24, 1898, that he was assuming "command of all the troops in the struggle for the attainment of our lofty aspirations, inaugurating a dictatorial government to be administered by decrees promulgated under my sole responsibility..."

Later in the day, he issued a decree formally establishing the Dictatorial Government. The decree nullified the orders issued under the authority of the Biyak-na-Bato republic and asserted that the Dictatorial Government was temporary in nature, "so that, when peace shall have been reestablished and our legitimate aspiration for unrestricted liberty attained, it may be modified by the nation, in which rests the principle of authority."