The son of Emperor Charles V and Isabella of Portugal, Philip inherited his father's Spanish Empire in 1556 and succeeded to the Portuguese throne in 1580 following a dynastic crisis. The Spanish conquests of the Inca Empire and of the Philippines, named in his honor by Ruy López de Villalobos, were completed during his reign. Under Philip II, Spain reached the height of its influence and power, sometimes called the Spanish Golden Age, and ruled territories in every continent then known to Europeans. Philip led a highly debt-leveraged regime, seeing state defaults in 1557, 1560, 1569, 1575, and 1596. This policy was partly the cause of the declaration of independence that created the Dutch Republic in 1581. Philip finished building the royal palace El Escorial in 1584.

Deeply devout, Philip saw himself as the defender of Catholic Europe against the Ottoman Empire and the Protestant Reformation. In 1584, Philip signed the Treaty of Joinville funding the French Catholic League over the following decade in its civil war against the French Huguenots. In 1588, he sent an armada to invade Protestant England, with the strategic aim of overthrowing Elizabeth I and re-establishing Catholicism there, but his fleet was defeated in a skirmish at Gravelines (northern France) and then destroyed by storms as it circled the British Isles to return to Spain. The following year Philip's naval power was able to recover after the failed invasion of the English Armada into Spain. Two more Spanish armadas unsuccessfully tried to invade England in 1596 and 1597. The Anglo-Spanish war carried on until 1604, six years after Philip's death.