He was a major benefactor of the city of Bilbao, where he expanded the local fishing village and granted it the power to maintain its customs market free of any Portazgo (royal tribute) answerable only to the authority of the Lord of Biscay.

On 25 April 1295, after the death of King Sancho IV of Castile (who the Haro family had fought to overthrow), Diego López took advantage of the instability in the court of the young King Ferdinand IV of Castile and took power over the Lordship of Biscay which rightfully belonged to his niece, María II Díaz de Haro.

[2] On 15 June 1300, Diego López V de Haro converted the fishing village of Bilbao into a town under the authority of the Lords of Biscay.

This coincided with a fall from grace of Maria de Molina as the contemporary magnates attempted to lessen the grip of power she had maintained over the king.

In the final months of 1302, the queen was in Valladolid where she agreed to placate the members of the nobility who threatened her with war against King Ferdinand IV who spent Christmas with John of Castile and Juan Núñez II de Lara in the Kingdom of León.

In May of that year, celebrations over the success of the meeting (which neither Diego Lopez, Maria de Molina, or Henry of Castile participated in) were held in Badajoz.

Diego Lopez' faction met in Roa with Juan Manuel, Prince of Villena, giving the latter orders to travel to the Kingdom of Aragon and to enlist his support against Ferdinand IV.

At the same time, the infante Pedro de Castilla y Molina, brother of Ferdinand IV, was to be named the King of Castile, marrying one of the daughters of James II of Aragon.

Henry claimed that his intention was to foster peace in the kingdom and eliminate the influence of the infante John of Castile and that of Juan Núñez II de Lara.

This plan, which proposed the breakup of the Kingdoms of Castile and León and the forced or obliged resignation of Fernando IV, was rejected by the queen Maria de Molina who refused to meet the rebel faction in Ariza.

This move, which weeded out many of the more moderate rebels, served only to cement the hardline base who vowed to wage war against the king, demanding further that the Kingdoms of Murcia and Jaén be turned over to Alfonso de la Cerda.

Understandably, the infante John accepted these terms and the king called Diego Lopez to Carrión de los Condes to cement the deal.

The king, who was at the time preparing for the Treaty of Torrellas, from which Diego Lopez was excluded, promised the infante John that he would receive Biscay after all and that Juan Núñez II de Lara would get La Bureba.

Diego Lopez V left the court without waiting for its final decision and began drafting a proposal soliciting aid from the pope.

It was around this time that Diego Lopez forged a new alliance with Juan Núñez II de Lara who had gotten into disputes with the infante John.

He moved from there to meet with Diego Lopez and his son, Lope Diaz IV where the three promised to wage war against the king in their respective territories.

The king ordered for the infante John to enter into negotiations with Diego Lopez V, something he agreed to without issue as his vassals were equally unsupportive of the war.

At the beginning of 1307, while the king, Maria de Molina and the infante John were in Valladolid, they heard news that Pope Clement V renounced the validity of the renunciation over Biscay of 1300.

Before the agreement over Biscay was finally reached, Juan Nunez II de Lara left the courts feeling betrayed by the king and his mother.

The king proceeded to Tordehumos in October 1307 where he began to siege the city together with the infante John, his son, Alfonso de Valencia, and the Grand Master of the Order of Santiago, Juan Osórez.

After the siege and the peace agreement, many nobles, sensing an opportunity to grab power, attempted to create new friction between Lara, the infante John and the king.

Ferdinand IV in turn decided to lay siege to the city of Algeciras which had been the main Muslim stronghold on the Iberian Peninsula for many years.

With the siege of Algeciras ongoing, Gibraltar fell to the forces of Ferdinand under the control of Juan Núñez II de Lara, Archbishop of Seville, Fernando Gutiérrez Tello and the Grand Master of the Order of Calatrava on 12 September 1309.

In mid October 1309, the infante John of Castile, his son, Alfonso, Juan Manual, and Fernán Ruiz de Saldaña deserted the Castilian encampment at Algeciras together with about fifty other knights.

The action, which was due in part because Ferdinand IV owed them a great deal of money, provoked the indignation of the European monarchs and the protest of James II of Aragon who tried to persuade the deserters unsuccessfully to return to Algeciras.

[4] Disease and generally poor conditions became so bad in the Christian camp that Ferdinand IV was forced to pawn the jewels and crowns of his wife, Constance of Portugal to pay his soldiers and knights.