At the annual meeting in December 1897, the Ottawa Capitals applied to join the AHAC but were turned down by the AHAC executive. The Capitals applied again at the annual meeting held in Montreal on December 10, 1898, leading to "a cataclysm in the hockey world." This time, the AHAC executive voted in favour of admitting the Capitals for league membership.
The Globe noted that the Capitals were "questionably amateur", referring to the paying of players. This led to the representatives of the Quebec Bulldogs, Montreal Victorias and Ottawa Hockey Club opting to withdraw from the association. The representative of the Montreal Hockey Club asked the group to reconsider but was declined, after which point Montreal HC also withdrew.
The withdrawing teams then met at the Windsor Hotel the same day. On December 14, the group met again and organized the Canadian Amateur Hockey League (CAHL), adding the Montreal Shamrocks for a complete conversion of the AHAC into the CAHL. The new league adopted the existing constitution of the AHAC, with the exception that new teams required unanimous approval of the CAHL executive in order to join the league.