The Treaty of Stockholm culminated a series of conflicts between Sweden and Prussia, specifically in the context of the Great Northern War, which had spanned over two decades and involved various European powers. Sweden, once a dominant force in Northern Europe, faced significant territorial losses and the rise of Prussia as a major power. The negotiations took place in Stockholm as both parties sought to end hostilities that had cost them dearly in resources and manpower. Swedish representatives, eager to stop the further deterioration of their military capacity, met with Prussian diplomats keen to formalize their advances in the region and reinforce their status.

Key aspects of the treaty included concessions from Sweden, allowing Prussia to expand its territory, which reflected the shifting dynamics in European politics. The agreement emphasized stability, ensuring that both nations would respect each other’s boundaries and pursue diplomatic engagement instead of military confrontation. This treaty marked Sweden's transition from a dominant power to one in decline, while it solidified Prussia's emergence as a formidable nation-state.

The signing of the Treaty of Stockholm is notable for its impact on ensuing diplomatic relations across Europe. It not only signaled the end of open hostilities between Sweden and Prussia but also established a framework for future treaties that sought to prevent such protracted conflicts. Over the following decades, the treaty influenced alliances and power dynamics in the region, paving the way for Prussia's eventual unification campaigns under Otto von Bismarck in the 19th century.