The Caroline affair (also known as the Caroline case) was a diplomatic crisis involving the United States, the United Kingdom, and the Canadian independence movement which lasted from 1837 to 1842. This modest military incident eventually acquired substantial international legal significance.

The affair began on December 28, 1837, when hundreds of Americans who had been recruited by Canadian rebel leader William Lyon Mackenzie encamped on Navy Island on the Canadian side of the Niagara River. They had been brought there by the small American steamer Caroline, which had made several trips that day between Navy Island and Schlosser, New York. Late that night, armed men crossed the Niagara River under British command to board and capture the vessel where it was moored at Schlosser's Landing in US territory. Shots were exchanged and two US citizens were killed, a watch-keeper and a cabin boy. British forces set fire to the Caroline and set it adrift in the Niagara River, about two miles above Niagara Falls. Sensationalized accounts of the affair were published by newspapers.

The burning outraged civilians on both sides of the US–Canadian border. In retaliation, a private militia composed of both US citizens and Canadians attacked a British vessel and destroyed it. During 1838, there were several other clashes pitting British forces against private militia. The diplomatic crisis was defused during the negotiations of several US–UK disputes that led to the Webster-Ashburton Treaty in 1842. In the course of these negotiations, both the United States and Britain made concessions concerning their conduct.

Correspondence between US Secretary of State Daniel Webster and special minister to the United States Lord Ashburton outlined the conditions under which one nation might lawfully violate the territorial sovereignty of another state. The Caroline test" (or Caroline Doctrine) states that exceptions do exist to territorial inviolability, but "those exceptions should be confined to cases in which the necessity of that self-defense is instant, overwhelming, and leaving no choice of means, and no moment for deliberation".

According to scholars, the "Caroline test" remains an accepted part of international law today. For example, Tom Nichols (2008) has stated:

Thus the destruction of an insignificant ship in what one scholar has called a "comic opera affair" in the early 19th century nonetheless led to the establishment of a principle of international law that would govern, at least in theory, the use of force for over 250 years [sic?].