quality:correction, quality:corruption, structural:summarization, structural:reformatting
Decolonization (1954–1999)

In the wake of World War II, decolonization movements began to gain momentum in the empires of the European powers. The ensuing Cold War also created instabilities among Portuguese overseas populations, as the United States and Soviet Union vied to increase their spheres of influence. Following the granting of independence to India by Britain in 1947, and the decision by France to allow its enclaves in India to be incorporated into the newly independent nation, pressure was placed on Portugal to do the same. This was resisted by António de Oliveira Salazar, who had taken power in 1933. Salazar rebuffed a request in 1950 by Indian Prime Minister Jawaharlal Nehru to return the enclaves, viewing them as integral parts of Portugal. The following year, the Portuguese constitution was amended to change the status of the colonies to overseas provinces. In 1954, a local uprising resulted in the overthrow of the Portuguese authorities in the Indian enclave of Dadra and Nagar Haveli. The existence of the remaining Portuguese colonies in India became increasingly untenable and Nehru enjoyed the support of almost all the Indian domestic political parties as well as the Soviet Union and its allies. In 1961, shortly after an uprising against the Portuguese in Angola, Nehru ordered the Indian Army into Goa, Daman and Diu, which were quickly captured and formally annexed the following year. Salazar refused to recognize the transfer of sovereignty, believing the territories to be merely occupied. The Province of Goa continued to be represented in the Portuguese National Assembly until 1974.

The outbreak of violence in February 1961 in Angola was the beginning of the end of Portugal's empire in Africa. Portuguese army officers in Angola held the view that it would be incapable of dealing militarily with an outbreak of guerilla warfare and therefore that negotiations should begin with the independence movements. However, Salazar publicly stated his determination to keep the empire intact, and by the end of the year, 50,000 troops had been stationed there. The same year, the tiny Portuguese fort of São João Baptista de Ajudá in Ouidah, a remnant of the West African slave trade, was annexed by the new government of Dahomey (now Benin) that had gained its independence from France. Unrest spread from Angola to Guinea, which rebelled in 1963, and Mozambique in 1964.

According to one historian, Portuguese rulers were unwilling to meet the demands of their colonial subjects (unlike other European powers) in part because Portuguese elites believed that "Portugal lacked the means to conduct a successful "exit strategy" (akin to the "neocolonial" approach followed by the British, the French, or the Belgians)" and in part due to the lack of "a free and open debate on the costs of upholding an empire against the anti-colonial consensus that had prevailed in the United Nations since the early 1960s". The rise of Soviet influence among the Movimento das Forças Armadas 's military (MFA) and working class, and the cost and unpopularity of the Portuguese Colonial War (1961–1974), in which Portugal resisted to the emerging nationalist guerrilla movements in some of its African territories, eventually led to the collapse of the Estado Novo regime in 1974. Known as the " Carnation Revolution ", one of the first acts of the MFA-led government which then came into power – the National Salvation Junta (Junta de Salvação Nacional) – was to end the wars and negotiate Portuguese withdrawal from its African colonies. These events prompted a mass exodus of Portuguese citizens from Portugal's African territories (mostly from Angola and Mozambique), creating over a million Portuguese refugees – the retornados. Portugal's new ruling authorities also recognized Goa and other Portuguese India's territories invaded by India's military forces, as Indian territories. Benin's claims over São João Baptista de Ajudá were accepted by Portugal in 1974.

Civil wars in Angola and Mozambique promptly broke out, with incoming communist governments formed by the former rebels (and backed by the Soviet Union, Cuba, and other communist countries) fighting against insurgent groups supported by nations like Zaire, South Africa, and the United States. East Timor also declared independence in 1975 by making an exodus of many Portuguese refugees to Portugal, which was also known as retornados. However, East Timor was almost immediately invaded by Indonesia, which later occupied it until 1999. A United Nations-sponsored referendum resulted in a majority of East Timorese choosing independence, which was finally achieved in 2002.

In 1987, Portugal signed the Sino-Portuguese Joint Declaration with the People's Republic of China to establish the process and conditions for the transfer of sovereignty of Macau, its last remaining overseas possession. While this process was similar to the agreement between the United Kingdom and China two years earlier regarding Hong Kong, the Portuguese transfer to China was met with less resistance than that of Britain regarding Hong Kong, as Portugal had already recognized Macau as Chinese territory under Portuguese administration in 1979. Under the transfer agreement, Macau is to be governed under a one country, two systems policy, in which it will retain a high degree of autonomy and maintain its capitalist way of life for at least 50 years after the handover, until 2049. The handover of Macau on December 20, 1999, officially marked the end of the Portuguese Empire and the end of colonialism in Asia.