The Spanish considered Belize a backwater suitable only for cutting logwood to be used for dye. Although the Spanish 'owned' Belize, they did not rule it. The lack of effective government and the safety afforded by the reef attracted English and Scottish pirates during the 17th century. When piracy became passé, many of the pirates began working in the logging trade. Belize was British by tradition and sympathy by the time that a British force routed the Spanish armada off St George's Caye in 1798, delivering Belize from Spanish rule. In 1862, while the USA was embroiled in its Civil War and unable to enforce the terms of the Monroe Doctrine, Great Britain declared Belize to be the colony of British Honduras. After WWII, Belize's economy weakened, leading to agitation for independence.

Democratic political parties and institutions were formed and self-government was granted in 1964. The government decided to build a new capital at Belmopan in 1970, after Hurricane Hattie all but destroyed Belize City in 1961. Independence became a reality in September 1981 when British Honduras officially became Belize, a member of the British Commonwealth. Guatemala, which had territorial claims on Belize, threatened war in 1972, but British troops were stationed in Belize to make sure the dispute remained purely diplomatic.

During the volatile 1980s, Belize remained stable and pro-US, thanks predominantly to large influxes of US aid. In 1992, a new Guatemalan government recognized Belize's territorial integrity. The British garrison was withdrawn in 1994; Belize now has a standing army of only a few hundred soldiers. Since the fall of General Noriega in Panama, Belize has become a major transshipment point for cocaine heading into the US from South America. Cultivation and smuggling of marijuana is also prevalent.