[2][3] Olivenza and other neighbouring Spanish (La Codosera, Alburquerque and Badajoz) and Portuguese (Arronches, Campo Maior, Estremoz, Portalegre and Elvas) towns reached an agreement in 2008 to create a euroregion.

[4][5] Olivenza is located on the left (east) bank of the Guadiana river,[6] at an equal distance of 24 kilometres (15 miles) south of Elvas in Portugal and Badajoz in Spain.

[7] The Olivenza river—whose water is dammed up in the reservoir of Piedra Aguda, opened in 1956 and with a capacity of 16.3 hm3—discharges into the Guadiana,[7] leaving the city to its west and, then, south.

[11] Taken away from the alfoz of Badajoz, the Knights Templars had occupied the territory already by 1258,[12] founding an encomienda in Olivenza integrated in the Bailiwick of Jerez de los Caballeros.

[22] In the context of the War of the Spanish Succession, the Ajuda Bridge was used for the retreat of the Anglo-Portuguese army after they were crushed at the Battle of La Gudiña in May 1709.

[23] The victorious Spanish Bourbon army led by the Marquis de Bay ordered its destruction to prevent the Portuguese using it again.

[25][26] The 1801 Treaty of Badajoz putting an end to the war returned to Portugal the occupied towns except those on the left bank of the Guadiana river (the territory of Olivenza),[25] which were ceded to Spain, including its inhabitants, on a 'perpetual' basis.

At the beginning of the 1940s the city was reportedly mainly Portuguese-speaking (mother language spoken at home), even after close to 150 years under Spanish control.

However, it must also be noted that even in the twenty-first century, after the Franco dictatorship, many who tried to stand for their heritage and culture were declared personae non gratae and some were accused of "disrespecting the Spanish flag" for protecting the Portuguese language.

[39] In 1964, Olivenza became one of the first municipalities in the province of Badajoz that earned a heritage protection status of conjunto histórico-artístico for their historic cores.

[40] The report for the declaration cited that the city of Olivenza, "surrounded by a beautiful landscape of pasture and farmland, dominated by the imposing castle's keep", "offers a number of buildings, enclosures and places of notable importance in the monumental aspect".

Spain accepted the Treaty on 7 May 1817; however, Olivença and its surroundings were never returned to Portuguese control and this question remains unresolved[42] and Portugal holds a claim over it.

[citation needed] During the War of the Oranges, French and Spanish troops, under the command of Manuel de Godoy, took the town on 20 May 1801.