It was fought off the coast of Portugal (then within the Iberian Union) between an English naval expeditionary force sent out with orders by Queen Elizabeth I to prevent any further Spanish incursions against Ireland or England itself.

The English force under Richard Leveson and William Monson met a fleet of Spanish galleys and a large carrack at Sesimbra Bay commanded by Álvaro de Bazán and Federico Spinola.

The English were victorious in battle, sinking two galleys, forced the rest to retreat, neutralized the fort, and captured the carrack.

Sir Richard Leveson was chosen for this command as he had defeated the Spanish under Pedro de Zubiaur at Castlehaven and successfully blockaded Kinsale from any further reinforcement later leading to the victory there early in 1602.

Buoyed by this achievement he had indulged Philip III of Spain, the Duke of Lerma and Martín de Padilla in a vision of a massive galley-borne invasion of England from Flanders.

He was on his way from San Lucar to Lisbon but was diverted by the Viceroy of Portugal to see to the protection of the richly-laden Portuguese carrack São Valentinho anchored in the bay at Sesimbra.

On 1 June the English were off Lisbon with two captured Spanish prizes when word reached them that a large carrack and eleven galleys were in the vicinity of Sesimbra Bay.

[5] At mid-morning Monson with the ship Garland, Leveson with Warspite, Edward Manwaring with Dreadnought, followed by Nonpareil, Adventure and two captured prizes, entered the bay of Sesimbra.

[1] As the English entered the bay, without hesitation they fired with everything they had at the anchored and secured galleys but made sure they were out of effective range of the Spanish 60-pounder (27 kg) cannon.

[3][2] When Bazán's galleys did break formation Dreadnought with her shallow draught sailed into the confusion and took them all on at close range with her eleven demi-culverins and ten sakers.

[5] Under closer inspection the English realized that the carrack was a huge 1,700-ton vessel, São Valentinho, recently returned from the Portuguese Indies laden with goods.

[2][6] In this position the Spanish agreed to the English terms, to allow São Valentinho to be taken and the castle and shore defences to cease firing.

[6] The Spanish viceroy of Portugal was incensed with the defeat and the loss of the carrack, he had Don Diego Lobo condemned to death but he escaped through a window with the aid of his sister and fled to Italy.