The union ended following a civil war in Sweden in which he lost the crown to his uncle, who eventually became Charles IX.

The Sejm gave him permission, and on 3 August 1593, Sigismund, accompanied by his wife, Anna of Habsburg, and other followers, departed for Sweden.

In Sweden, he encountered a serious problem due to his religion, as Sigismund was a devoted Catholic, and most of the Swedish population (including Charles) had converted to Lutheranism.

Nevertheless, immediately after King John’s death, a synod summoned to Uppsala by Duke Charles rejected the new liturgy and drew up an anti-Catholic confession of faith on 5 March 1593.

Holy Scripture and the three primitive creeds were declared to be the true foundations of Christian faith, and the Augsburg confession was adopted, on 9 January 1594, in Uppsala.

On 18 May 1595 he signed a treaty of Teusina with Muscovy, ending the Russo-Swedish War (1590–95) by agreeing borders status quo ante bellum around the Gulf of Finland (Ingria) and recalling some of Sigismund's supporters their posts (among them, Admiral Klaus Fleming).

Supported by many Protestants and most of lower classes, he was opposed by most of the nobility, Catholics, the area constituting modern Finland, and most of the population of Stockholm.

Charles at first looked ready to negotiate but in fact he was playing for time, trying to confirm his power at another Riksdag (in Arboga), recruiting peasants for his army, and isolating Sigismund's followers.

In 1598, the Sejm gave Sigismund the go-ahead to wage a military campaign against his opponents in Sweden; however it refused to give him significant support.

A somewhat similar situation exists as of 2024, in that the Baltic Sea is now surrounded by NATO, with the sole exception of Kaliningrad and St. Petersburg.