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In 1975, Portugal granted independence to its Overseas Provinces (Províncias Ultramarinas in Portuguese) in Africa (Mozambique, Angola, Guinea-Bissau, Cape Verde and São Tomé and Príncipe). In that same year, Indonesia invaded and annexed the Portuguese province of Portuguese Timor (East Timor) in Asia before independence could be granted. The Asian dependency of Macau, after an agreement in 1986, was returned to Chinese sovereignty in 1999. Portugal applied international pressure to secure East Timor's independence from Indonesia, as East Timor was still legally a Portuguese dependency, and recognized as such by the United Nations. After a referendum in 1999, East Timor voted for independence and Portugal recognized its independence in 2002.

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.

Portugal's April 25, 1976 constitution reflected the country's 1974-76 move from authoritarian rule to provisional military government to a parliamentary democracy with some initial communist and left-wing influence. The military coup in 1974 was a result of the colonial wars and removed the authoritarian dictator, Marcelo Caetano, from power.

The Romans associated Portugal with Bacchus, their God of Winery and Feast. Today the country is known by wine lovers, and its wines had won several international prizes. Many famous Portuguese wines are known as some of the world's best: Vinho Verde, Vinho Alvarinho, Vinho do Douro, Vinho do Alentejo, Vinho do Dão, Vinho da Bairrada and the sweet: Port Wine, Madeira wine and the Moscatels of Setúbal and Favaios (Douro). Port Wine is largely exported, now followed by Vinho Verde. Exports of Vinho Verde are largely increasing, in response to the growing international demand.

The first known people that lived in Portugal were the Oestriminis, that stretched their territory from Galicia (Northwestern Spain) to the Algarve. They are today seen as the first native people.