Compromise mate, that's what happened. It was a political draw.

The IRA started targeting high value areas, the UK Government saw the cost (they probably won't admit that though) involved and the two sides came to an agreement.
So the Provos are no more (although the paramilitaries on both sides still have a fair amount of presence in organised crime), some of their senior members are Members of Parliament (although the Sinn Fein members (the IRA's political wing) don't set foot in the place and are abstentionist MP's).
A big part ( I think) in their demise was probably due to 9-11, with supporters in the USA having a major wake up call on exactly the type of activity their money was going toward. After that the IRA's main source of funding started to dry up.
The nail in the coffin for the last of the real bastards in their ranks was the Omagh bombing
http://en.wikipedia.org/wiki/Omagh_bombing 
(I think that event basically sickened everyone, regardless of which side of the divide they were on)
(p.s. That's basically it in a nutshell...no doubt the presbyterians and catholics will come along later and 'correct' me..

)