Philip III (d. 1621) was a devout, phlegmatic nonentity, totally incapable of carrying on his father's methods of personal government. He therefore had to have a minister who would do all his work for him, a privado. His choice, the Duke de Lerma, however, turned out to be a singularly unfortunate one. During the reign of Philip III the government of Spain either became the victim of events that it did not attempt to control or allowed its hand to be forced by outsiders.
In 1599-1600 an epidemic plague claimed some 500,000 victims in Castile. The most serious social crisis of the reign was the problem of Moriscos (those who had been forcibly but ineffectively converted to Christianity). In 1609 Lerma's government ordered the expulsion of the Moriscos, by 1614 some 275,000 Moriscos had been forced to leave Spain.
Neither Philip III nor Lerma was emotionally or intellectually capable of the fundamental reappraisal of foreign policy that Philip II's failures called for. The Treaty of London (1604) ended 16 years of Anglo-Spanish war, the Spanish and Dutch concluded a 12-year truce, beginning in 1609. The years from 1610 to 1630 were the last period in which Spain clearly dominated Europe. For the first of these two decades Europe enjoyed a kind of Pax Hispanica.
In 1621 Philip III died. Philip IV (1621-1665), a boy of 16, left the effective powers of kingship in the hands of his former gentleman of the chamber, the Count (later Count-Duke) de Olivares. Militarily, Spain was in a favourable position to restart the war with the United Provinces at the expiration of the truce in 1621. Despite enormous sums sent annually from Castile to Flanders, the Spanish armies could not break Dutch resistance. From 1630, when Sweden and France actively intervened in the war, Spain rapidly lost the initiative.
Olivares, an able politician directing the Spanish government, presented to the king a number of plans for a far-reaching reform of government and society. None of these plans was put into practice. In 1639 riots and open rebellion broke out in Catalonia. As a result the liberties and privileges of Catalonia were fully restored in 1652. The revolt of Catalonia gave the Portuguese their opportunity. the Portuguese nobility decided to seize power in Lisbon and proclaimed the Duke de Bragança as King John IV of Portugal (December 1640). In 1647, popular revolutions broke out in Naples and Palermo (Sicily), and soon these two cities were in the hands of revolutionary governments. Philip IV came to terms with the United Provinces, recognizing their full independence (Treaty of Münster, January 1648). In 1668 Spain formally recognized the independence of Portugal.
For 10 years Philip IV's widow, Maria Anna of Austria, acted as regent for Charles II (1665-1700). She allowed her government to be dominated by her confessor, the Austrian Jesuit Johann Eberhard (Juan Everardo) Nithard. In 1669, Nithard was overthrown by Don Juan José of Austria, an illegitimate son of Philip IV. Don Juan José planned some promising reforms but died in 1679. In three successive wars with France (1667-68, 1672-78, 1689-97), Spain lost Franche-Comté (Treaty of Nijmegen, 1678) and some Belgian frontier towns to France but still managed to hold on to the greater part of the southern Netherlands and the Italian dominions. The last years of the childless and clearly dying Charles II were occupied by the maneuvers of the European powers for the Spanish succession or, alternatively, for the partition of the Spanish empire. the rule of the house of Austria came to an end with the death of Charles II, on Nov. 1, 1700.
There can be no doubt about the economic and political decline of Spain in the 17th century and especially in its second half. But it is not nearly as clear that there was also a comparable cultural decline or even decadence, as has sometimes been maintained. Certainly, Calderón, Velázquez, and Murillo had no successors of comparable stature. The court of Charles II was neither financially nor psychologically capable of playing the patronage role that Philip IV's court had played. Some of the supposed decline, however, may have been more a matter of changing styles in painting and architecture that did not please the more conservative contemporaries, nor many later historians.
In literature it was a great period of the theatre with Lope de Vega (1562-1635), Tirso de Molina (1570-1650) and Calderón (1600-1681). Poetry and the novel were immortalized by Góngora (1561-1627) and the Don Quixote of Cervantes (1547-1616).
In music the 'zarzuelas', 'églogas' and the 'comedias harmónicas' belonged to musical drama for which contemporary dramatists wrote.