Philip II of Spain ruled a vast empire, including (at various times) Spain, Naples, the Seventeen Provinces, Portugal, the Algarves, New Spain (in America), and Peru. Philip demanded direct rule over the Seventeen Provinces per the Pragmatic Sanction, even though a journey from Madrid to the provinces would take more than two weeks.
There was frustration over this and over the taxation policies by the King of Spain. Also, as stated, the treatment of the inhabitants in the provinces as all the same people further increased tensions. What made matters worse, Philip II proposed the institution of new bishoprics in the Low Countries and an increase in the prosecution of "heretics." An archbishop of Mechelen was appointed to help solidify this control. The Inquisition was called in by approval of Philip II's Council of State.
The local nobility was furious. They felt this was an insult to their own positions of authority and decided to act. They formed the Compromise of the Nobility to force the hand of Margaret of Parma, Philip II's half-sister and regent. As many as four hundred lesser nobles (who made up the majority of the movement against Philip II) assembled at Brussels in April 1566. In disgust, one minister referred to the petitioning nobles as les gueux ("the Beggars"). The nobles used the term as a badge of honor. They promised violence unless things changed. Although Margaret promised moderation, it was too little too late.
In the late spring of 1566, Protestant preachers set off a series of riots, called the Iconoclast Fury. The movement spread quickly, hitting Antwerp by August 20. Ghent, Amsterdam, Leiden, and Utrecht all followed within a few days. Margaret acquiesced to the repeated demands of the Compromise of Nobility, allowing protestantism to be practiced where it already existed. Unfortunately, the Compromise of Nobility soon collapsed, leaving no one officially able to vouch for the agreement. The iconoclasm continued, and Margaret decided the only real response was a military one.
The Duke of Alba invaded, which further pushed the local aristocracy from Spanish rule. In 1572, a prominent member of the aristocracy named William the Silent (also called William of Nassau) invaded, but he could only hold two provinces, Holland and Zeeland. He backed out and left for France, where he was able to recruit some Huguenots. With these and the aid of Dutch rebels in England, he planned a three-pronged assault on the provinces to oust the Spanish: he would attack with about 30,000 men from Germany; the Huguenots would strike from France; and the Watergeuzen—mercenaries sailing corsairs—would hit the northwestern shore.
However, the attack was poorly coordinated. The Watergeuzen struck before William was ready, taking Brielle on 1 April 1572. Rather than the usual hit-and-run tactics, the Watergeuzen claimed the city for William of Nassau by flying an orange flag (William was of the House of Orange). Soon most cities in Holland and Zeeland (notably not Middelburg or Amsterdam, however) let themselves switch to Watergeuzen control. Although not technically qualified to do so, the cities then called for Staten Generaal (General State Assembly), where they reinstated William as the official steward (stadthouder) of Holland and Zeeland.
Unfortunately, the Huguenots from France provided little efficacy, thanks in part to the St. Bartholomew's Day Massacre, an event on August 24 that had incited much of France against the Huguenots. An initial wave left France and reached the Netherlands successfully, but no further help came from this direction.
William of Nassau then marched with his own force from Germany, taking cities such as Roermond and Leuven. By this time, however, the Spanish armies had begun fighting back, now under the direction of Don Luis de Zúñiga y Requesens (who replaced Alba in 1573). While some cities could not be retaken (the siege of Alkmaar resulted in a Spanish retreat), many paid dearly, like Haarlem, Mechelen and Zutphen (the former suffered severe mistreatment and abuse; the latter two suffered massacres of their inhabitants). In addition to these losses, William's own force was hit hard by the Spanish, and he was forced to retreat to Enkhuizen (in Holland).
As the war progressed, the Spanish began to suffer financially. Despite a clear victory at the Battle of Mookerheyde (where William lost two of his own brothers, Louis and Henry), the Spanish failed to resolve matters quickly. William seemed quite capable of retaking cities the Spanish had captured again; a siege at Leiden failed after the Dutch there broke nearby dikes (William would later establish the University of Leiden in the city's honor); and the Spanish leader, de Zúñiga y Requesens, died unexpectedly. Without him at the helm and with soldiers frequently going unpaid because of empty coffers, the Spanish army began to buckle and collapse on itself.
The Staten Generaal of the Dutch provinces (the ruling body after the king) came together under the Union of Utrecht and passed an Act of Abjuration (i.e., an oath of rejection). They refused to continue to recognize the rule of King Philip, and the Staten Generaal became the ruling body; the southern Netherlands (modern day Belgium) was not part of the Union of Utrecht and so stayed under Spanish rule. Philip offered a reward of 25,000 crowns to anyone who killed William the Silent, the Prince of the House of Orange, calling him a "pest on the whole of Christianity and the enemy of the human race." The leader of the rebellion was assassinated in 1584 by Balthasar Gérard.
The Dutch forces continued to fight under Maurice of Nassau, son of the late William. He received help from Queen Elizabeth I in 1585, and the Dutch gained an advantage over the Spanish, primarily because of their growing economic strength in contrast to Philip's growing economic weakness.