Such an administrative entity, on the conciliar model of the Council of Castile, was created following the Spanish conquest of the Aztec empire in 1521, which demonstrated the importance of the Americas.
Originally an itinerary council that followed Charles V, it was subsequently established as an autonomous body with legislative, executive and judicial functions by Philip II of Spain and placed in Madrid in 1561.
The Catholic Monarchs (Isabella and Ferdinand) designated Juan Rodríguez de Fonseca to study the problems related to the colonization process arising from what was seen as tyrannical behavior of Governor Christopher Columbus and his misgovernment of Natives and Iberian settlers.
[7] Internecine fighting and political instability in Peru and the untiring efforts of Bartolomé de las Casas on behalf of the natives' rights resulted in Charles's overhaul of the structure of the Council in 1542 with issuing of the "New Laws", which put limits on the rights of Spanish holders of encomiendas, grants of indigenous labor.
In later years, nobles and royal favorites were in the ranks of councilors, as well as men who had experience in the high courts (Audiencias) of the Indies.
In the final years of the Habsburg dynasty, some appointments were sold or were accorded to people obviously unqualified, such as a nine-year-old boy, whose father had rendered services to the crown.
The Cortes of Cádiz, the body many Spaniards considered the legitimate government in Spain and its overseas territories in the absence of their Bourbon monarch, abolished the Council in 1812.
[16] The Council was finally abolished in 1834, a year after Ferdinand VII's death and after most of Spain's empire in the Americas declared independence.