In 1995-96, the WWF was in a tough spot: buyrates were plummeting, crowd attendance was falling, and many of their biggest stars were leaving for greener pastures: Kevin Nash, Scott Hall, Lex Luger, Ted DiBiase, and Sean Waltman, among many others, defected to WCW.  Others simply left or were fired.

A new group of talent was brought in to try to stop the bleeding--Mick Foley, Brian Pillman, Goldust, Rocky Maivia, and the, ahem, Ringmaster, who you better know as Stone Cold Steve AustinBret Hart and Shawn Michaels were finally given their chance to shine, headlining Wrestlemania XII. The WWF called it The New Generation.

It didn't work.

June 1996: Stone Cold Steve Austin wins the King of the Ring, coining his Austin 3:16 catchphrase during the coronation ceremony and establishing himself as a legitimate heel threat for the first time.

July 1996:  Hulk Hogan made a surprise appearance at Bash in the Beach '96, shocking the world by turning heel and kicking off the nWo angle that would catapult World Championship Wrestling ahead of the WWF in the ratings for the next two years.

Fall 1996: An increasingly heartless Steve Austin moves into a feud with perennial babyface Bret Hart.

November 1996: Austin and Hart have an incredible match at Survivor Series '96 which saw Hart go over in a fluke.
 

The fans started cheering Austin.

Let me repeat that: The fans started cheering Austin.  The asshole.  The heartless bastard.  The complete anti-hero.
 

Early 1997: Austin and Hart continue their increasingly bitter feud.

March 1997: At Wrestlemania 13, Austin and Hart met in an "I Quit" match.  In the most famous double turn in wrestling history, Austin turned babyface by establishing himself as a tough son of a bitch who wouldn't submit, even as his face was covered with a crimson mask of blood.  Bret Hart brutally attacked Austin with a chair after the match, consummating the heel turn that had been building up for months.
 

The most amazing thing is that Austin didn't radically alter his behavior--he still broke the rules, cursed out the fans, and did everything that had made him so hated in the first place.  Yet, the fans now cheered for him.  They were tired of seeing the same old comic book character routine.  This was shades of gray.  This was the beginning of a new era.  This was the beginning of WWF Attitude.
 

The second phase was the coming of Degeneration X.  After turning heel in September of 1997, Shawn Michaels, HHH, and Chyna formed this new stable.  The story behind it was that the three of them wanted to join their Clique-mates in WCW, so they were acting as obnoxiously as possible to try to get fired from the WWF.  While they were indeed a heel stable, they weren't the cheat-at-all-costs, be-as-hated-as-possible heels of old--they cracked jokes, they made insider references, they were downright funny sometimes.  Fans loved to hate them, instead of just plain hating them.

If the Stone Cold Steve Austin character was to be the new babyface style, Degeneration X was the new heel style.
 

November 1997: Symbolically and realistically, the end of the "old" way of doing things came at Survivor Series '97.  Bret Hart had been increasingly vocal in opposing the new "extreme" direction the WWF was taking, and combined with money problems and backstage differences, the company decide to intentionally breach Hart's contract and let him go to WCW.

One prob:  He was still the WWF Champion at the time. A match had been signed for Survivor Series between Hart and Shawn Michaels, who agreed to put their personal differences aside for a few weeks and do some matches so that Hart could drop the title to Michaels before he left the company.

But...

Hart didn't want to lose the title in Montreal, his home town.  Survivor Series was in Montreal.  After hours and hours of deliberation, a screwjob ending was decided upon, wherein Hart would keep the title and then lose it to Michaels the next week at a house show.

Vince McMahon brutally doublecrossed Hart, having the bell ring while Bret was in his own finishing maneuver, the Sharpshooter, and awarded the title to Michaels.  The era of pure babyfaces riding off into the sunset was over, and this was their wake-up call.  For more details, see The Montreal Incident.
 

March 1998: Insanely over Stone Cold Steve Austin defeated Shawn Michaels at Wrestlemania XIV to win his first WWF Championship.  The next, night, Vince McMahon would permanently take an on-screen role as Mr. McMahon--an evil caracature of himself.

MISTER McMahon became disgusted with Austin--Austin wasn't a "corporate" champion.  He drank beers in the ring.  He cursed.  He attacked officials and referees.  He did everything a good champion wasn't supposed to do--everything the fans were supposed to be booing him for.  McMahon became the obvious villain to feud with Austin, and the night after Wrestlemania, McMahon began an immensely popular feud with Austin that would last for the entire year.  It was everything the fans wanted to see--a blue collar worker taking it to his greedy, arrogant, snobbish boss.

Two weeks after Wrestlemania, the WWF beat WCW in the ratings for the first time in two years.

The era of saying your prayers, eating your vitamins, and believing in yourself was over.

The era of Attitude had arrived.