Gustavus Vasa was elected to the throne by the Riksdag in 1523 at the age of 27. During his long reign, he restored internal order, cut Sweden's ties to the Roman Catholic church, beginning the change of the state's religion to Lutheranism. He also strengthened state finances by transferring the church's vast holdings to the monarchy and ended the Hanseatic League's monopoly over Swedish trade. At his death in 1560, Sweden had become a power in Europe. The reigns of Gustavus Vasa's sons encompassed more than a half century. They pursued an aggressive foreign policy, warring with Denmark, Poland, and Russia, and conquering Estonia.

In 1630 Gustavus Adolphus intervened at a critical phase in the Thirty Years' War on behalf of the Protestant cause. A brilliant military leader, he won several victories before he was killed at the battle of Lützen, 1632. The affairs of state were carried on by his able chancellor, Axel Oxenstierna, during the minority of Queen Christina. In these years, the colony of New Sweden was founded in North America (1638). Sweden gained territory in northern Germany in 1648 by the Peace of Westphalia, ending the Thirty Years' War, and entered the last half of the 17th century as the dominant power in northern Europe. In 1658 it forced Denmark to cede its provinces on the Swedish mainland.

Sweden's small population and limited economic resources shortened its period of ascendancy. Under Charles XI (1660–97), an absolute monarchy had developed, with the power of the council and the Riksdag severely restricted. Charles XII (1697–1718) continued in the autocratic tradition. In the Great Northern War, which broke out in 1700, the 18-year-old king brilliantly repulsed a powerful coalition of enemies. His invasion of Russia, however, ended in his defeat at Poltava in 1709, and when the final peace treaty was signed in 1721, Sweden had lost its East Baltic and German possessions. The long war drained the country of its resources and ended its status as a great power.