King Carlos I of Portugal confirmed colonial treaties of the 19th century that stabilized the situation in Portuguese Africa. These agreements were, however, unpopular in Portugal, where they were seen as being to the disadvantage of the country. In addition, Portugal was declared bankrupt twice—first on 14 June 1892 and again on 10 May 1902—causing industrial disturbances, socialist, and republican antagonism and press criticism of the monarchy. Carlos responded by appointing João Franco as Prime Minister and subsequently accepting Parliament's dissolution. In 1908, Carlos I was assassinated in Lisbon. The Portuguese monarchy lasted until 1910 when, through the 5 October revolution, it was overthrown and Portugal was proclaimed a republic. The overthrow of the Portuguese monarchy in 1910 led to a 16-year struggle to sustain parliamentary democracy under republicanism – the Portuguese First Republic (1910–1926).
The 28 May 1926 coup d'état or, during the period of Estado Novo, the National Revolution (Portuguese: Revolução Nacional), was a military action that put an end to the chaotic Portuguese First Republic and initiated the Ditadura Nacional (National Dictatorship) (years later, renamed Estado Novo).
With fascist organizations being popular and widely supported across many countries (like Italian Fascism and National Socialism) as an antagonist of communist ideologies, António de Oliveira Salazar developed the Estado Novo which can be described as a right leaning corporatist regime of para-fascist inspiration. The basis of his regime was a platform of stability, in direct contrast to the unstable environment of the First Republic. According to some Portuguese scholars like Jaime Nogueira Pinto and Rui Ramos, his early reforms and policies changed the whole nation since they allowed political and financial stability and therefore social order and economic growth, after the politically unstable and financially chaotic years of the Portuguese First Republic (1910–1926). After the First Republic, when not even public order was achieved, this looked like an impressive breakthrough to most of the population; Salazar achieved his height in popularity at this point. This transfiguration of Portugal was then known as A Lição de Salazar – "Salazar's Lesson". Salazar's program was opposed to communism, socialism, and liberalism. It was pro-Catholic, conservative, and nationalistic. Its policy envisaged the perpetuation of Portugal as a pluricontinental empire, financially autonomous and politically independent from the dominating superpowers, and a source of civilization and stability to the overseas societies in the African and Asian possessions.