Spain reluctantly ceded the strategically important Gibraltar to Great Britain in the 1713 Treaty of Utrecht, and the British garrison at Gibraltar was formally declared a colony in 1830. In a referendum held in 1967, Gibraltarians voted overwhelmingly to remain a British dependency. After the UK granted Gibraltar autonomy in 1969, Spain closed the border and severed all communication links. Between 1997 and 2002, the UK and Spain held a series of talks on establishing temporary joint sovereignty over Gibraltar. In response to these talks, the Gibraltar Government called a referendum in 2002 in which the majority of citizens voted overwhelmingly against sharing sovereignty with Spain. Since 2004, Spain, the UK, and Gibraltar have held tripartite talks to resolve problems that affect the local population, and work continues on cooperation agreements in areas such as taxation and financial services, communications and maritime security, legal and customs services, environmental protection, and education and visa services. A new noncolonial constitution came into force in 2007, and the European Court of First Instance recognized Gibraltar's right to regulate its own tax regime in 2008. The UK retains responsibility for defense, foreign relations, internal security, and financial stability.

Spain and the UK continue to spar over the territory. In 2009, for example, a dispute over Gibraltar's claim to territorial waters extending out three miles gave rise to periodic non-violent maritime confrontations between Spanish and UK naval patrols. Spain renewed its demands for an eventual return of Gibraltar to Spanish control after the UK’s 2016 vote to leave the EU, but London has dismissed any connection between the vote and its sovereignty over Gibraltar.