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Early years

Isabella was born in Madrigal de las Altas Torres to King John II of Castile and his second wife, Isabella of Portugal, on 22 April 1451. At the time of Isabella's birth, she was second in line to the throne after her older half-brother Henry. Henry was 26 at that time and married, but childless. Isabella's younger brother Alfonso was born two years later on 17 November 1453, demoting her position to third in line. When her father died in 1454, her half-brother ascended to the throne as King Henry IV. Isabella and her brother Alfonso were left in King Henry's care. Isabella, her mother, and Alfonso then moved to Arévalo.

These were times of turmoil for Isabella. The living conditions at their castle in Arévalo were poor, and they suffered from a shortage of money. Although her father arranged in his will for his children to be financially well taken care of, King Henry did not comply with their father's wishes, either from a desire to keep his half-siblings restricted or from ineptitude. Even though her living conditions were difficult, Isabella was instructed in lessons of practical piety and in a deep reverence for religion under the supervision of her mother.

When the king's wife, Joan of Portugal, was about to give birth to their daughter Joanna, Isabella and her brother Alfonso were summoned to court in Segovia to come under the direct supervision of the king and to finish their education. Alfonso was placed in the care of a tutor while Isabella became part of the queen's household.

Some of Isabella's living conditions improved in Segovia. She always had food and clothing and lived in a castle that was adorned with gold and silver. Isabella's basic education consisted of reading, spelling, writing, grammar, history, arithmetic, art, chess, dancing, embroidery, music, and religious instruction. She and her ladies-in-waiting entertained themselves with art, embroidery, and music. She lived a relaxed lifestyle, but she rarely left Segovia since King Henry forbade this. Her half-brother was keeping her from the political turmoil going on in the kingdom, though Isabella had full knowledge of what was going on and of her role in the feuds.

After a rumor spread that Joanna was not actually the daughter of King Henry but rather of a royal favorite, Beltrán de la Cueva, noblemen confronted King Henry and demanded that the king's younger half-brother Alfonso be named his successor. They even went so far as to ask Alfonso to seize the throne. The nobles, now in control of Alfonso and claiming that he was the true heir, clashed with King Henry's forces at the Second Battle of Olmedo in 1467. The battle was a draw. King Henry agreed to recognize Alfonso as his heir presumptive, provided that he would marry his daughter, Princess Joanna. Soon after he was named Prince of Asturias, he died at the age of fourteen in July 1468. The nobles who had supported him suspected poisoning. As she had been named in her brother's will as his successor, the nobles asked Isabella to take his place as champion of the rebellion. However, support for the rebels had begun to wane, and Isabella preferred a negotiated settlement to continuing the war. She met with her elder half-brother Henry at Toros de Guisando and they reached a compromise: the war would stop, King Henry would name Isabella his heir presumptive instead of his daughter Joanna, and Isabella would not marry without her half-brother's consent, but he would not be able to force her to marry against her will. Isabella's side came out with most of what the nobles desired, though they did not go so far as to officially depose King Henry; they were not powerful enough to do so, and Isabella did not want to jeopardize the principle of fair inherited succession, since it was upon this idea that she had based her argument for legitimacy as heir-presumptive.