Henry renounced his clerical offices and sought to take a bride for the continuation of the Aviz dynasty, but Pope Gregory XIII, affiliated with the Habsburgs, did not release him from his vows.

By this time the Portuguese throne was disputed by several claimants; among them were Catherine, Duchess of Braganza (1540–1614), her nephew Ranuccio I Farnese, Duke of Parma, Philip II of Spain, and António, Prior of Crato.

According to the feudal custom, her late older sister's son Ranuccio, an Italian, was the closest heir, then the Duchess herself, and only after them, King Philip.

However, he governed in Continental Portugal for only 33 days, culminating in his defeat at the Battle of Alcântara by the Spanish armies led by Fernando Álvarez de Toledo, Duke of Alba on August 25.

In early 1581, António fled to France and, as Philip's armies had not yet occupied the Azores, he sailed there with French adventurers under Filippo Strozzi, a Florentine exile in the service of France, but was utterly defeated at sea by a Spanish fleet commanded by Don Álvaro de Bazán, 1st Marquis of Santa Cruz at the Battle of Ponta Delgada off Terceira Island on July 26, 1582 and off São Miguel Island on July 27, 1582.

The combined Spanish-Portuguese navy's victory resulted in the rapid conquest of the Azores, completing the dynastic union of the Portuguese and Spanish empires.