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The 20th century initially brought little peace; colonisation of Western Sahara, Spanish Morocco and Equatorial Guinea was attempted as a substitute for the loss of the Americas. A period of dictatorial rule (1923-1931) ended with the establishment of the Second Spanish Republic. The Republic offered political autonomy to the Basque Country and Catalonia and gave voting rights to women. However, with increasing political polarisation and pressure from all sides, coupled with growing and unchecked political violence, the Republic ended with the outbreak of the Spanish Civil War in July 1936. Following the victory of the nationalist forces in 1939, General Francisco Franco ruled a nation exhausted politically and economically until his death in 1975.

Spain is considered by many, including a large part of Spanish population, to be a group of nations unified under a single State, much like Belgium, Switzerland or the United Kingdom. Despite this, the policy of many Spanish governments has led to a "Spanish nationhood" which is the one people identify with Spain internationally.

The expulsion of the Muslims was reputedly started by the first King of Asturias, named Pelayo (718-737), who started his fight against the Moors in the mountains of Covadonga (722). Later, his sons and descendants continued with his work until all of the Muslims were expelled. Meanwhile, in the east of the peninsula the Frankish emperors established the Marca Hispanica across the Pyrenees in part of what today is Catalonia, reconquering Girona in 785 and Barcelona in 801. It was a buffer zone against Islam.

In 1499, about 50,000 Moors in Granada were coerced by Cardinal Cisneros into mass baptisms and conversion. During the uprising that followed (known as the First Rebellion of the Alpujarras), people who refused the choices of baptism or deportation to Africa, were systematically eliminated. What followed was a mass flee of Moors, Jews and Gitanos from Granada city and the villages to the mountain regions (and their hills) and the rural country, however by 1500 Cisneros reported that "There is now no one in the city who is not a Christian, and all the mosques are churches".

Spain suffered a shocking terrorist attack, the March 11, 2004 Madrid attacks on its capital's commuter train network, killing 200. Al-Qaeda has been blamed for this attack. Some have attributed the fall of the Aznar government to this attack, which took place just two days before the 2004 elections. At first the public believed ETA was responsible for the bombing. When they learned Al-Qaeda was the true culprit, many voters lashed out at the media and Aznar's government, believing the two had colluded to deceive the public.

Contemporary Madrid came into its own after the death of the Fascist dictator Franco. Years of the Franco regime left Madrid and much the country in economic shambles due to isolation. With his death, Madrid and Spain as a whole began to re-assert itself on the international stage. Within Spain, reaction against the dictatorial bureaucracy centered in Madrid and a history of centralism that pre-dated Franco by centuries has resulted in the successful modern movement towards increased autonomy for the regions of Spain, considered as European regions, under the umbrella of Spain.

In 1898 Spain lost the Spanish-American War. Cuba gained its independence, and Spain lost its remaining New World colonies—Guam, the Philippines, and Puerto Rico—to the United States. Spain's colonial possessions were reduced to Spanish Morocco, Western Sahara and Equatorial Guinea.

The first governments of the Republic, were center-left, headed by Niceto Alcalá-Zamora, and Manuel Azaña. In 1933, the right-wing CEDA won power; an armed rising of workers of October 1934, which reached its greatest intensity in Asturias and Catalonia, was forcefully put down by the CEDA government.

With the approval of the Spanish Constitution of 1978 and the arrival of democracy, the old historic nationalities — Basque Country, Catalonia, Galicia and Andalusia— were given far-reaching autonomy, which was then soon extended to all Spanish regions, resulting in one of the most decentralized territorial organizations in Western Europe.

Modern Spain began to take form during the Reconquista, the struggle between the Christian kingdoms arising in the northern regions left unconquered by the Moors and the Muslim kingdoms into which Al-Andalus eventually split.

The Complutense University is one of the oldest universities in the world, as well as the largest and (after Salamanca) most prestigious in Spain. It has 10000 staff and a student population of 117 000. It is located on two campuses, in the university quarter Ciudad Universitaria at Moncloa in Madrid, and in Somosaguas.

After World War II, being one of few surviving fascist regimes in Europe, Spain was politically and economically isolated and was kept out of the United Nations until 1955, when it became strategically important for U.S. president Eisenhower to establish a military presence in the Iberian peninsula. This opening to Spain was aided by Franco's rabid anti-communism.

As recently as the mid-20th-century, much of Spain (especially outside of the major cities) remained quite distinct from the rest of Europe. In 1954, V.S. Pritchett could still write of small Spanish towns, "The inn, if there is one, will not be a hotel, nor even a fonda — the Arab word — but perhaps a posada: a place one can ride into with a mule or a donkey, where one can stable an animal and lie down oneself on a sack of straw, the other side of the stall." [Pritchett, 1954 p. 46-47] However, especially since the 1975 death of Francisco Franco, Spain has become increasingly European; Pritchett's rustic posada would be unimaginable today.