The Treaty of Lyon was established after years of intense conflict during the Italian Wars, particularly the war that raged from 1494 to 1504. It represented a significant diplomatic effort to conclude hostilities between France and Spain regarding control over various Italian territories. The treaty was finalized on January 31, 1504, and confirmed France's domination over northern Italy, a consequence of its military campaigns that had impacted the region's political landscape. The terms of the treaty established clear borders and laid out specific territorial claims, with France retaining control over certain regions while Spain secured the Kingdom of Naples.

A crucial aspect of the treaty was its reflection of the shifting alliances and power struggles that characterized the Italian Wars. France, led by Charles VIII and later Louis XII, had sought to expand its influence across Italy, facing resistance from various local states, as well as from rival powers, particularly Spain. The conclusion of the war was significant in that it not only established a semblance of order in the region but also highlighted the emerging rivalry between France and Spain that would shape European politics for the next century. By controlling Naples, Spain fortified its influence in the Mediterranean, gaining vital access to trade routes and enhancing its status as a European power.

The treaty's implications extended beyond mere territorial changes; it also set the stage for future conflicts as the balance of power continually shifted in Europe. It illustrated how diplomacy could both resolve conflicts and lay the groundwork for future tensions, echoing the complexities of international relations in an era defined by territorial ambition and dynastic politics.