After the defeat of the Armada Invencible in 1588, Spain's military power declined. It lost some of its territories in the Americas to other European countries. Its control of trade with the New World had gradually broken down, and the profits from its discoveries were going in large part to its European rivals, not least because Spain lacked the manufacturing infrastructure needed to exploit the raw materials it brought back from its colonies. Haring (294–5) notes that as early as in 1608 the Consejo de Indias (the king's chief advisory body) reported to him that two thirds of the gold and silver being brought back to Spain was being lost to foreign interests. There were attempts by the Bourbon monarchs to remedy this, to reform the system and increase efficiency, but these were too few and came too late.

Although Spain kept its American empire going for over three hundred years, by the eighteenth century criollo dissatisfactions had reached a significant level. Spain had done its best to censor the flow of information into the colonies, yet the new, Enlightenment-led thinking about matters such as human rights and representative government was affecting attitudes in the New World. The American and French Revolutions were seen as inspiring examples by Spanish Americans who were tired of being governed by a Spanish monarchy. However, the spark that set fire to the real drive for Spanish-American independence is often said to have come from Napoleon's invasion of Spain in 1808, when he installed his brother on the throne. The resulting Spanish resistance, initially in the form of juntas, or action committees, in some ways served as a model for the criollos of Spanish America, who convened cabildos abiertos (town meetings) in which their own juntas were elected. Ostensibly, the purpose of the cabildos abiertos was to support the legitimate Spanish monarch, whom Napoleon had forced to abdicate, but many of the criollos clearly saw an opportunity to take advantage of Spain's instability. When Napoleon was finally driven out of Spain in 1814, Fernando VII was restored to the throne, but he rejected a liberal constitution that had been developed during his absence, one that would have allowed him to continue as a constitutional monarch, and in doing so he provoked an armed rebellion in Spain that lasted three years.