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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.

The crown jewel of Spain's next decade of infrastructure construction is the Spanish high speed rail network, Alta Velocidad Española AVE. Currently, an ambitious plan includes the construction of a 7000 km network, centered naturally on Madrid. The overall goal is to have all important provincial cities be no more than 4 hours away from Madrid, and no more than 6 hours away from Barcelona. Currently, AVE high-speed trains link Atocha station to Seville in the south and Lleida in the east (to be extended to Barcelona).

Spain's natural surroundings have helped shape the culture of the nation. The success of the Basques in maintaining a separate culture over a period of millennia has doubtless been aided by the mountainous geography of their region. Several separate parts of Spain have strong maritime traditions, including inland ports on rivers: Seville, for example, was a major port until the Guadalquivir silted up. Since the availalability of mass air transport, Spain's Mediterranean beaches, especially those along the Costa del Sol, have drawn millions of tourists, providing considerable revenue (and enormous contact with the outside world) to a long-depressed and isolated area of the country.

According to the latest official poll, 80% of Spaniards self-identify as Catholic, 12% as non-believer, and 1% as other (the remaining 7% declined to state). Of the 1.4% identifying as other, 29% identified as Evangelical Christian, 26% as Jehovah's Witnesses and 3% as Muslim (the rest either mentioned smaller religions or declined to state). According to the same poll, 73% believe in God, 14% don't and 12% are unsure (1% declined to state). Additionally, according to this poll, only 41% believe in Heaven. 24% of the Spaniards think that the Bible is just a fable. Only 25% of Catholics go to church at least once a week.

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.

The most important minority group in the country are the Gitanos. Other indigenous minorities are Mercheros (or Quinquis) and Vaqueiros de alzada.- The latter, meaning "Mountain cow-breeders" dwell in mountain ranges in the Principality of Asturias and have kept historically apart from the valley dwellers. Foreign minorities include South Americans from countries like Argentina, Ecuador or Colombia; black Africans; Arabs and Berbers mainly from Morocco and other countries of North Africa; and Asians from China, Japan, Korea, and Vietnam.

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.

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.