From the 16th century, Portugal gradually saw its wealth decreasing. Even if Portugal was officially an autonomous state, the country was a Spanish puppet and Portuguese colonies were attacked by Spain's opponents, especially the Dutch and English.

At home, life was calm and serene with the first two Spanish kings; they maintained Portugal's status, gave excellent positions to Portuguese nobles in the Spanish courts and Portugal maintained an independent law, currency and government. It was even proposed to move the Spanish capital to Lisbon. But Philip III tried to make Portugal a Spanish province, and Portuguese nobles lost power. Because of this, on December 1, 1640, the native king, John IV, was acclaimed, and a Restoration war against Spain was made. Ceuta governors didn't accept the new king and maintained their allegiance to Spain.

In the 17th century the Portuguese emigrated in large numbers to Brazil. In 1709, John V prohibited emigration, since Portugal had lost a sizable fraction of its population. Brazil was elevated to a vice-kingdom and Amerindians gained total freedom.