The election was held after the referendum on Spanish membership in NATO in March 1986 had resulted in a surprising win for the 'In' camp headed by Prime Minister Felipe González.

Reinforced from the referendum result, the Spanish Socialist Workers' Party (PSOE) sought to take advantage of the favorable political situation.

[3][4] For the Congress of Deputies, 348 seats were elected using the D'Hondt method and a closed list proportional representation, with an electoral threshold of three percent of valid votes—which included blank ballots—being applied in each constituency.

The prime minister had the prerogative to propose the monarch to dissolve both chambers at any given time—either jointly or separately—and call a snap election, provided that no motion of no confidence was in process, no state of emergency was in force and that dissolution did not occur before one year had elapsed since the previous one.

[21] The Cortes Generales were officially dissolved on 23 April 1986 after the publication of the dissolution decree in the BOE, setting the election date for 22 June and scheduling for both chambers to reconvene on 15 July.

[8] Shortly after assuming office on 2 December 1982, Prime Minister Felipe González had to face a worsening economic situation, with high inflation, soaring unemployment and a public deficit at 6%.

[22][23] Among the new PSOE government's first economic measures were the nationalization of the Rumasa holding due to its financial situation and because of alleged fraudulent practices and continuous evasion from the inspection activity conducted by the Bank of Spain,[24] the reduction of work time to 40-hour week and the establishment of a minimum legal annual leave of 30 days and a lunch break of 15 minutes.

[28][31] A new labor reform was approved, which included fiscal incentives to investment, added protection for unemployed and the easing of temporality through the implementation of fixed-term contracts.

[44] According to Santos Juliá, the main factors that influenced the PSOE government's change of attitude were "pressure from the United States and several European countries; the connection between staying in NATO and Spain–EEC negotiations and the growing favorable stance of the Spanish Defence Ministry to attain closer ties with the Alliance".

[53][54][55] In the left, the Communist Party of Spain (PCE) experienced an internal crisis which saw the resignation of its leader Santiago Carrillo and his succession by Gerardo Iglesias.

Spanish citizens of age and with the legal capacity to vote could run for election, provided that they were not sentenced to imprisonment by a final court's decision nor convicted by a judgement, even if not yet final, which imposed a penalty of forfeiture of eligibility or of specific disqualification or suspension from public office under specific offences: rebellion and terrorism when involving crimes against life, physical integrity or freedom of persons.

Other general causes of ineligibility were imposed on members of the Spanish royal family; the president and members of the Constitutional Court, the General Council of the Judiciary, the Supreme Court, the Council of State and the Court of Auditors; the Ombudsman; the State's Attorney General; high-ranking members—undersecretaries, secretaries-general, directors-general and chiefs of staff—of Spanish government departments, the Prime Minister's Office, government delegations, the Social Security and other government agencies; heads of diplomatic missions in foreign states or international organizations; judges and public prosecutors in active service; Armed Forces and police corps personnel in active service; members of electoral commissions; the chair of RTVE; the director of the Electoral Register Office; the governor and deputy governor of the Bank of Spain; the chairs of the Official Credit Institute and other official credit institutions; and members of the Nuclear Safety Council; as well as a number of territorial-level officers in the aforementioned government bodies and institutions being barred from running, during their tenure of office, in constituencies within the whole or part of their respective area of jurisdiction.

[64][65] Disqualification provisions for the Cortes Generales extended to any employee of a foreign state and to members of regional governments, as well as the impossibility of running simultaneously as candidate for both the Congress and Senate.

[70] Another message of the Socialist electoral campaign revolved around the idea that a non-Socialist government would revert the political and social advances accomplished in the previous years, with PM González himself warning of a possible alternative coalition between the various centre and centre-right parties in case the PSOE lost its absolute majority.

[75] He also wanted to distance himself from direct confrontation to the other parties' candidates, usually leaving that task to Deputy Prime Minister Alfonso Guerra and other PSOE leaders, in order to emphasize his image as Chief of the Executive.

[77] Opposition parties had accused the PSOE government of a rudely style of ruling, of arrogance, of little austerity and of informational opacity, a result, according to them, of the large absolute majority of seats it had obtained in the 1982 election.

Some regionalist parties in different autonomous communities, such as the Navarrese People's Union in Navarre, also joined the coalition, who was to be led into the election by AP leader Manuel Fraga.

Among the Coalition's election pledges were the privatization of public companies (the most notable example being TVE 2) and of the healthcare assistance system in order to reduce tax burden and public spending; the implementation of a national plan against drugs; the illegalization of HB and tougher penalties for terrorists (going as far as to promise an end to ETA terrorism within 6 months); a repeal of the newly approved abortion law and a revision of the divorce law.

Instead, the 'Yes' landslide victory had reinforced the PSOE in the eyes of public opinion, but the Coalition's position on the referendum was met with skepticism and disapproval from other centre-right parties, both nationally and internationally.

[83] Aside from its anti-NATO stance, the IU coalition also opposed the Socialist government's recent industrial conversion, which had been carried out almost unilaterally and with little to no talks with trade unions, thanks to the PSOE absolute majority in Congress.

On the international stage, IU promised to bring Spain out of NATO, the dismantling of US bases and the withdrawal of US troops from Spanish soil, as well as to counter "the harmful consequences of integration within the EEC, a conception of Europe against the interests of multinationals and imperialism and to support initiatives for the elimination of nuclear weapons and against the militarization of space."

In the election aftermath, the People's Coalition found itself into a state of deep crisis after results showed it was unable to garner the support of the centre voters.