In the latter part of the 16th century, Spain was the major international power and either ruled, colonized, or exercised influence over much of the known world. English 'sea-dogs' had been causing a great deal of damage to Spain's trade in silver. Men such as Sir Francis Drake attacked Spanish shipping off of the West Indies and Spain lost a vast sum of money when the ships carrying silver sunk or had their cargo captured by Drake. To the English, Drake was a hero but to the Spanish he was nothing more than a pirate who, in their view, was allowed to do what he did with the full knowledge of Queen Elizabeth. This the Spanish could not accept.
Spain controlled what was called the Spanish Netherlands. This consisted of modern day Holland and Belgium. In particular, Holland wanted its independence. They did not like being made to be Catholic; in fact, Protestant ideas had taken root in Holland and many of those in Holland were secret Protestants. If they had publicly stated their Protestant beliefs, their lives would have been in danger. Spain used a religious secret police called the Inquisition to hunt out Protestants. However, during Elizabeth's reign, the English had been helping the Dutch Protestants in Holland. This greatly angered King Felipe II of Spain. With England under his control, Felipe could control the English Channel and his ships could have an easy passage from Spain to the Spanish Netherlands. Spanish troops stationed there could be easily supplied.