After a successful conquest of the Kingdom of Portugal, Philip II of Spain was confronted with a new conflict with António, Prior of Crato, forcing the former to delay the acclamation and recognition of his son, Diego, Prince of Asturias, as heir and legitimate successor to the Portuguese Crown.

Philip had opened the Junta dos Estados (English: Council of States) on 17 April, 1581, to establish guarantees for the Portuguese Crown, and to facilitate this, he published an amnesty for those implicated in supporting the Prior of Crato during the succession crisis.

When he eventually arrived in Almada, the King was advised of the bad disposition that existed on the island of Terceira towards his reign and that they had refused to accept Ambrósio de Aguiar Coutinho as the new governor.

Consequently, he ordered the preparation of an armada that could potentially secure the island of São Miguel, place locals under the obedience of the Crown, and facilitate shipping to the Indies.

At the time, the fortress of Santo António did not exist, and troops from the ships disembarked the next morning near Monte Brasil, confiscated a fishing boat that could have been used to alert the residents, and strengthened their positions overlooking the city by the third night.

Philip II of Spain heard of the state of Terceira and its dependants, and, except for São Miguel and Santa Maria, its residents rejected the installation of the new governor that he sent to the islands.

Motivated by ambition, a potential victory, and the glory associated with it, Pedro Valdez decided to disembark his forces in a pasture used by some of his troops to collect fruit or parlay with the local Portuguese.

Valdez believed that the following tactic would end the rebellion: dispatch troops to join some of his men on the mainland, take Angra, and refortify the enclave until Lopo de Figueiroa arrived to provide support (which was expected).

Consequently, on the morning of 24 July, Governor Ciprião do Figueiredo determined that the enemy, because of a few movements, intended to create a beachhead in the parish of Santo António do Porto Judeu.

On the morning of the feast day of Santiago (25 July), finding the waters peaceful and the wind favourable, Pedro de Valdez ordered troops to set out on small launches and the seized boat, with his first column of 200 well-armed men and some artillery.

The Spanish forces spread into the plain of Vale, while the defenders gathered on the high ground near a spring and manor owned by the farmer Bartolomeu Lourenço, his wife Brianda Pereira (a nobleman's daughter), and their children.

Eric Lassota von Steblau, a German from Bleischwitz (modern-day Poland) who recorded in his memoirs his service on the Habsburg fleet wrote: ... in a place called 'Porto Judeos'... but this man released against the Spanish many oxen, broke their ranks, fell from above, exterminated them all, without allowing those who fled to the sea to reach some ship or boat by swimming; he committed great atrocities even against the dead on the island, ripping the hearts out and cutting off the noble parts to make a public demonstration of all.

"Many threw themselves into the sea, but as they were equipped with armour, they easily sunk; others, wishing to drop their weapons, could not do so so quickly that they would not be killed, without the boats being able to approach, due to the much gunfire that was being made on against them from land.

Finally, Governor Ciprião de Figueiredo, after having buried the bodies he had driven in carts to a common grave, triumphantly entered the village of São Sebastião, dragging the enemy's flags, and shortly afterwards passed on to the city of Angra, where he was received with elation.