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The Line of Demarcation was an imaginary longitude, moved slightly from the line drawn by Pope Alexander VI to divide new lands claimed by Portugal from those of Spain. This line was drawn in 1493 after Christopher Columbus returned from his maiden voyage to the Americas. Territorial disputes between the two seafaring nations led the Pope to adjudicate in the hope that this would lead to peace between the two powers. It allocated territory as between Spain and Portugal, excepting only those areas already ruled by a Christian monarch or power; the interests of the people then inhabiting the affected lands were not otherwise taken into account.

The line drawn ran north to south about 560 kilometres (350 miles) west of the Azores and Cape Verde islands. On the other side of the globe, it passed just east of the Philippine islands. Portugal's claim to the Philippines was recognized by Spain in the Treaty of Saragossa in 1529, which set the longitude 17° east of The Moluccas — The Spice Islands.

Portugal was allowed to claim land to the east of this line, and Spain to the west. The line was never surveyed and many historians suppose that it was near the 48° longitude. It also just missed crossing the South American coast which had not yet been discovered. However, neither nation was satisfied with this settlement, and a year later they mutually agreed by the Treaty of Tordesillas (signed in 1494) to shift the line 2,000 km (1,300 miles) to the west of the Cape Verde Islands. This later gave the Portuguese a claim to Brazil.

In later treaties between the two nations, Portugal gave up its claim to the Philippines in exchange for Brazil. Although the line was created to settle territorial disputes between the sole powers at that time, it did not take into account the rise of other powers such as France, nor the Protestant nations of Britain or the Netherlands, who ignored the papal demarcation and staked their own claims.