Habsburg Spain refers to Spain and the Hispanic Monarchy, also known as the Catholic Monarchy, in the period from 1516 to 1700 when it was ruled by kings from the House of Habsburg. It had territories around the world, including modern-day Spain, a piece of south-eastern France, eventually Portugal and many other lands outside the Iberian Peninsula, including in the Americas and Asia. In this period the Spanish Empire was at the zenith of its influence and power. It then expanded to include territories over the five continents, consisting of much of the American continent and islands thereof, the West Indies in the Americas, the Low Countries, Italian territories and parts of France in Europe and the Philippines and other possessions in Southeast Asia. The period of Spanish history has also been referred to as the "Age of Expansion".

The Habsburg name was not continuously used by the family members, since they often emphasized their more prestigious princely titles. The dynasty was thus long known as the "House of Austria". Complementary, in some circumstances the family members were identified by their place of birth. Charles V was known in his youth after his birthplace as Charles of Ghent. When he became king of Spain he was known as Charles I of Spain, and after he was elected emperor, as Charles V (in French, Charles Quint). In Spain, the dynasty was known as the Casa de Austria, including illegitimate sons such as John of Austria and John Joseph of Austria. The arms displayed in their simplest form were those of Austria, which the Habsburgs had made their own, at times impaled with the arms of the Duchy of Burgundy (ancient), as seen on the arms of John of Austria. Calling this era "Habsburg", is, to some extent, a convenience for historians.

The marriage of Isabella I of Castile and Ferdinand II of Aragon in 1469 resulted in the union of the two main crowns, Castile and Aragon, which eventually led to the de facto unification of Spain after the culmination of the Reconquista with the conquest of Granada in 1492 and of Navarre in 1512 to 1529. Isabella and Ferdinand were bestowed the title of "Catholic King and Queen" by Pope Alexander VI in 1494. With the Habsburgs, the term Monarchia Catholica (Catholic Monarchy, Modern Spanish: Monarquía Católica) remained in use. Spain continued to be one of the greatest political and military powers in Europe and the world for much of the 16th and 17th centuries. During the Habsburg's period, Spain ushered in the Spanish Golden Age of arts and literature producing some of the world's most outstanding writers and painters and influential intellectuals, including Teresa of Ávila, Pedro Calderón de la Barca, Miguel de Cervantes, Francisco de Quevedo, Diego Velázquez, El Greco, Domingo de Soto, Francisco Suárez and Francisco de Vitoria. After the death in 1700 of Spain's last Habsburg king, Charles II, the resulting War of the Spanish Succession led to the ascension of Philip V of the Bourbon dynasty, which began a new centralising state formation, which came into being de jure after the Nueva Planta decrees that merged the multiple crowns of its former realms (except for Navarre).

 Beginnings of the empire (1504–1521)

In 1504, Isabella I of Castile died, and although Ferdinand II of Aragon tried to maintain his position over Castile in the wake of her death, the Castilian Cortes Generales (the parliament) chose to crown Isabella's daughter Joanna of Castile as queen. Her husband, Philip I of Castile, was the Habsburg son of Maximilian I, Holy Roman Emperor and Mary of Burgundy. Shortly thereafter Joanna began to lapse into insanity, although the extent of her mental illness remains the topic of some debate. In 1506, Philip I was declared jure uxoris king, but he died later that year under mysterious circumstances, possibly poisoned by his father-in-law, Ferdinand II. Since their oldest son Charles was only six, the Cortes reluctantly allowed Joanna's father Ferdinand II to rule the country as the regent of Queen Joanna and Charles.

Spain was now in personal union under Ferdinand II of Aragon. As undisputed ruler in most of the Peninsula, Ferdinand adopted a more aggressive policy than he had as Isabella's husband, going on to crystallize his long-running designs over Navarre into a full-blown invasion led initially by a Castilian military expedition, and supported later by Aragonese troops (1512). He also attempted to enlarge Spain's sphere of influence in Italy, strengthening it against France. As ruler of Aragon, Ferdinand had been involved in the struggle against France and the Republic of Venice for control of Italy. These conflicts became the center of Ferdinand's foreign policy as king. Ferdinand's first investment of Spanish forces came in the War of the League of Cambrai against Venice, where the Spanish soldiers distinguished themselves on the field alongside their French allies at the Battle of Agnadello (1509). Only a year later, Ferdinand joined the Holy League against France, seeing a chance at taking both Naples (to which he held a dynastic claim) and Navarre, which was claimed through his marriage to Germaine of Foix. The war was less of a success than that against Venice, and in 1516 France agreed to a truce that left Milan under French control and recognized Spanish hegemony in northern Navarre. Ferdinand would die later that year.

Ferdinand's death led to the ascension of young Charles to both Spanish thrones as Charles I of Castile and Aragon, further solidifying the monarchy of Spain. His inheritance included all the Spanish possessions in the New World and around the Mediterranean. Upon the death of his Habsburg father in 1506, Charles had inherited the Habsburg Netherlands and Franche-Comté, growing up in Flanders. In 1519, with the death of his paternal grandfather Maximilian I, Charles inherited the Habsburg territories in Germany, and was duly elected as Holy Roman Emperor that year. His mother Joanna remained titular queen of Castile until her death in 1555, but due to her mental health and worries of her being proposed as an alternative monarch by opposition (as happened in the Revolt of the Comuneros), Charles kept her imprisoned.

At that point, Emperor and King Charles was the most powerful man in Christendom. The accumulation of so much power by one man and one dynasty greatly concerned Francis I of France, who found himself surrounded by Habsburg territories. In 1521 Francis invaded the Spanish possessions in Italy and Navarre, which inaugurated a second round of Franco-Spanish conflict. The war was a disaster for France, which suffered defeats at Biccoca (1522), Pavia (1525, at which Francis was captured), and Landriano (1529) before Francis relented and abandoned Milan to Spain once more. Spain's overseas possessions in the New World were based in the Caribbean and the Spanish Main and consisted of a rapidly decreasing indigenous population, few resources of value to the crown, and a sparse Spanish settler population. The situation changed dramatically with the expedition of Hernán Cortés, who, with alliances with city-states hostile to the Aztecs and thousands of indigenous Mexican warriors, conquered the Aztec Empire in 1521. Following the pattern established in Spain during the Reconquista and in the Caribbean, the first European settlements in the Americas, conquerors divided up the indigenous population in private holdings encomiendas and exploited their labor. With Americas colonization, Spain gained vast new indigenous populations to convert to Christianity and rule as vassals of the crown. Charles established the Council of the Indies in 1524 to oversee all of Castile's overseas possessions. Charles appointed a viceroy in Mexico in 1535, capping the royal governance of the high court, Real Audiencia, and treasury officials with the highest royal official. Officials were under the jurisdiction of the Council of the Indies. Charles promulgated the New Laws of 1542 to limit the power of the Conquistadors to form a hereditary aristocracy that might challenge the power of the crown.

 Charles, an emperor and a king (1521–1558)

Charles's victory at the Battle of Pavia (1525) surprised many Italians and Germans and elicited concerns that Charles would endeavor to gain even greater power. Pope Clement VII switched sides and now joined forces with France and prominent Italian states against the Habsburg Emperor, in the War of the League of Cognac. In 1527, due to Charles' inability to pay them sufficiently, his armies in Northern Italy mutinied and sacked Rome itself for loot, forcing Clement, and succeeding popes, to be considerably more prudent in their dealings with secular authorities. In 1533, Clement's refusal to annul Henry VIII of England's marriage to Catherine of Aragon (Charles' aunt) was a direct consequence of his unwillingness to offend the Emperor and perhaps have his capital sacked a second time. The Peace of Barcelona, signed between Charles and the pope in 1529, established a more cordial relationship between the two leaders that effectively made Charles the protector of the Catholic cause and recognized Charles as King of Italy in return for Imperial-Spanish intervention in overthrowing the rebellious Republic of Florence.

The Protestant Reformation had begun in Germany in 1517. Charles, through his position as Holy Roman Emperor, his important holdings along Germany's frontiers, and his close relationship with his Habsburg relatives in Austria, had a vested interest in maintaining the stability of the Holy Roman Empire. The German Peasants' War broke out in Germany in 1524 and ravaged the country until it was brutally put down in 1526. Charles, even as far away from Germany as he was, was committed to keeping order. After the Peasants' War the Protestants organized themselves into a defensive league to protect themselves from Emperor Charles. Under the protection of the Schmalkaldic League, the Protestant states committed a number of outrages in the eyes of the Catholic Church (the confiscation of some ecclesiastical territories, among other things) and defied the authority of the Emperor.

In 1543, Francis I, King of France, announced his unprecedented alliance with the Ottoman sultan, Suleiman the Magnificent, by occupying the Spanish-controlled city of Nice in cooperation with Turkish forces. Henry VIII of England, who bore a greater grudge against France than he held against the Emperor for standing in the way of his divorce, joined Charles in his invasion of France. Although the Spanish army was soundly defeated at the Battle of Ceresole, in Savoy Henry fared better, and France was forced to accept terms. The Austrians, led by Charles's younger brother Ferdinand, continued to fight the Ottomans in the east. With France defeated, Charles went to take care of an older problem: the Schmalkaldic League.

Perhaps more important to the strategy of the Spanish king, the League had allied itself with the French, and efforts in Germany to undermine the League had been rebuffed. Francis's defeat in 1544 led to the annulment of the alliance with the Protestants, and Charles took advantage of the opportunity. He first tried the path of negotiation at the Council of Trent in 1545, but the Protestant leadership, feeling betrayed by the stance taken by the Catholics at the council, went to war, led by the Elector of Saxony Maurice. In response, Charles invaded Germany at the head of a mixed Dutch-Spanish army, hoping to restore the Imperial authority. The Emperor personally inflicted a decisive defeat on the Protestants at the historic Battle of Mühlberg in 1547. In 1555, Charles signed the Peace of Augsburg with the Protestant states and restored stability in Germany on his principle of cuius regio, eius religio ("whose realm, his religion"). Charles's involvement in Germany would establish a role for Spain as protector of the Catholic Habsburg cause in the Holy Roman Empire.

In 1526, Charles married Infanta Isabella, the sister of John III of Portugal. In 1556 he abdicated from his positions, giving his Spanish empire to his only surviving son, Philip II of Spain, and the Holy Roman Empire to his brother, Ferdinand. Charles retired to the monastery of Yuste (Extremadura, Spain), and died in 1558.