[5] Electoral setbacks for the PSOE in the Basque and Galician regional elections held on 25 September 2016 unleashed a party crisis which led to Pedro Sánchez's ouster as leader on 1 October.

[8][9] Voting for the Cortes Generales was on the basis of universal suffrage, which comprised all nationals over 18 years of age and in full enjoyment of their political rights.

[12][13] 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.

The Cortes Generales were officially dissolved on 3 May 2016 after the publication of the dissolution decree in the BOE, setting the election date for 26 June and scheduling for both chambers to reconvene on 19 July.

By early February, a massive illegal financing network had been uncovered connected with PPCV, with dozens of party officials and city councillors indicted or arrested.

[40][41][42] The judicial investigation also implicated long-serving former Mayor of Valencia Rita Barberá in the scandal; her arrest or indictment was only prevented due to the fact she had legal immunity as an incumbent senator.

Evidence suggested that the public work contract kickbacks from the Punica case could also involve possible illegal financing of the PP branch in the region.

[50] On 15 April, caretaker Industry Minister José Manuel Soria stepped down from his post as a result of his involvement in the Panama Papers scandal and his confusing and inconsistent statements on the issue.

[64] On 22 January, Mariano Rajoy turned down King Felipe VI's invitation to form a government after Podemos offered a coalition proposal to the PSOE, also including IU, with Sánchez as prime minister and Pablo Iglesias as his deputy.

This marked the first time since the transition to democracy that an election was called under Article 99.5 of the Constitution, wherein initiative for the Cortes' dissolution belonged to the King and not to the prime minister.

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, the Court of Auditors and the Economic and Social Council; 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.

[87][88] 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.

Concurrently, parties, federations or coalitions that had not obtained a mandate in either chamber of the Cortes at the preceding election were required to secure the signature of at least 0.1 percent of electors in the aforementioned constituencies.

[92] Meanwhile, in Navarre, both Navarrese People's Union and PP were likely to maintain their alliance ahead of the upcoming general election, aiming at keeping their status as the first political force in the region.

Izquierda-Ezkerra started talks with Podemos ahead of an alliance, whereas Geroa Bai and EH Bildu were open to "exploring" coalition possibilities after failing to make headway in the Congress in the region after the 2015 election.

[128] On 9 May, Pablo Iglesias (Podemos) and Alberto Garzón (IU) officially announced that a formal alliance had been reached and that their parties would be running together in the upcoming general election.

[135] The PP proposed that the party avoid large scale rallies, aiming at running a "simpler" campaign—with smaller events in medium-sized cities and towns[136]—while also suggesting reducing the campaign's length to 10 days and removing external advertising—namely that involving advertising through billboards and flags.

[144] C's, on its part, discarded its pact with the PSOE after it was announced that a new election would be held, with party leaders stating that it "won't be in force anymore" once the Cortes were dissolved.

[148][149] Concurrently, PSOE leaders had tried to pressure IU into avoiding an electoral alliance with Podemos out of fear of being pushed into third place nationally,[150] with some commenting that the party's actions had been erratic and confusing throughout negotiations.

[154][155] As the newly formed Unidos Podemos alliance was announced on early May, the PSOE found itself under threat of being marginalised as both PP and UP sought to polarise the campaign between the two.

[161] Pablo Iglesias blamed the PSOE for the failure in negotiations and commented that Podemos' aim in the June election would be to directly face the PP as equals, in what he referred to as a "second round" of the December run.

[163] During an interview held a few days later, Iglesias took for granted that his party had already surpassed the PSOE nationally and stated he would offer Sánchez be his deputy in a Podemos-led cabinet.

[164] Once his electoral coalition with IU had been formalized, Iglesias again reiterated his wish to see the PSOE "as an ally"—despite the Socialists having rejected Podemos' offer for an alliance to the Senate—and put overtaking the PP as his target.

Various nods to 15-M were made: the announcement of the Podemos–IU alliance was staged on 9 May at Puerta del Sol, long-regarded as a symbol and focal point for 15-M. Concurrently, Podemos launched an "accountability" campaign under the 'Congress in your square' label "to regain the connection with the streets".

The leaders of the four main parties were invited, with Pablo Iglesias and Albert Rivera confirming their presence but making it conditional on Rajoy and Sánchez attending as well.

[196] Following the result of the Brexit vote three days before the election in Spain, the PP issued a statement saying the country needed "stability" in the face of "radicalism" and "populism."

Nonetheless, it recovered slightly on some of the regions where it performed the worst in December 2015, with notable advances in Madrid, Valencian Community, Navarre, Asturias, Galicia and the Canary Islands.

The Basque Nationalist Party (PNV) lost in Biscay only for the second time since the return of democracy, which cost them the loss of the province's 3rd seat to Unidos Podemos.

At the same time, the PP result was attributed to a last-hour surge motivated by centre-right tactical voting against Pablo Iglesias, influenced by Unidos Podemos' strong showing in opinion polls.