Ferdinand of Aragon and Isabella of Castile were the original power couple.
When their joint reign began in 1479, they unified their two kingdoms and helped establish the modern country of Spain. They also financed Christopher Columbus in his search for a new route to India (and, no, Isabella didn't really sell her jewels to do it), and raised six children ( most of whom died before reaching adulthood ). In 1492 alone (the same year that Columbus discovered the New World), Ferdinand and Isabella's army successfully drove out the last of the Moorish rulers in 1492 and annexed Granada to their other possessions, The same year saw the passing of the Alhambra decree (a.k.a. the Edict of Expulsion) that ordered all Jews to either convert to Christianity or leave Spanish territory altogether. The property of all Jews who refused to convert was seized (which enriched the Spanish treasury considerably). The edict also applied to Muslims who remained in Granada. An estimated 40,000 to 50,000 Jews chose to convert while the rest were scattered across Europe and the Middle East.
And then there was the Spanish Inquisition..
First established as a formal tribunal in 1478 by Ferdinand and Isabella, the Tribunal of the Holy Office of the Inquisition was intended to replace the Inquisition that had been under Papal control for centuries. Although the Inquisition had functioned in many of Spain's former separate kingdoms, Ferdinand and Isabella's joint reign over Castile and Aragon allowed the establishment of a formal inquisition over all of Spain (there had never been an inquisition in Castile for instance, just Aragon). Placing the Inquisition under the direct control of the Spanish crown had a number of advantages, most notably allowing the speedy confiscation of the property of convicted heretics. It was actually Alonso de Ojeda, Prior of the Dominicans of Seville who first convinced Isabella that a strong Inquisition was needed to root out the "Judaizing" influence of converted Jews who were supposedly practicing their religion secretly and undermining Christianity. Not the actual Jews, mind you. They were never the direct target of the Inquisition (of course there were none left in Spain after 1492). Incidents of fanatical persecution certainly took place over the years and those Jews who managed to survive by either converting or going into hiding came to enjoy a certain protection, courtesy of the Crown. The pressure was on them to convert though and stories of "relapsos" who converted to Christianity and then secretly returned to Judaism spurred clerics into taking stronger measures.
That's not to say that Spain was the only country engaging in religious persecution during that era. The Papal-run Medieval Inquisition was still going strong in most Catholic countries. The Protestant reformation of the 16th and 17th centuries had sparked bloody wars of religion with Protestant leaders persecuting Catholics (i.e., in England and parts of Germany) and vice versa. Jews were hardly welcome anywhere, including Portugal which began its own Inquisition just a few years after Spain did (as the Jews who had fled there from Spain discovered to their dismay) and the anti-witch hysteria that would kill thousands was just beginning. Despite the widespread persecution, the Spanish Inquisition definitely stands out in the annals of history and much of the credit for that goes to its chief architect: Isabella's confessor and the first Inquisitor-General Tomas de Torquemada .
Finding an impartial historical account of Torquemada's life and times is probably impossible. Between early Spanish sources that praised him and his Inquisition and later writers who denounced Torquemada as a monster, there is no clear picture of who he was and how he was able to persuade Ferdinand and Isabella to give him the power to carry out his vision of a proper Inquisition. As Prior of the Dominican Convent of Holy Cross of Segovia and nephew of the late Cardinal of San Sisto, Frey Tomas de Torquemada was eminently placed to become a powerful influence on Isabella. Described as "tall and gaunt and stooping slightly at the shoulders, mild-eyed of a cast of countenance that is gentle, noble, and benign", Torquemada was an impressive figure in the white habit and black cloak of the Dominican Brotherhood. By all accounts, he was the very picture of a religious figure to be trusted.
Born in Valladolid in 1420, he followed in his uncle's footsteps by entering the Dominican order at a young age. Later historians have argued that several of Torquemada's ancestors were converted Jews (if you can appreciate the irony) but there was no indication that this had any influence on his later actions. With his reputation for austerity and piety (he was said to have remained true to his vows of poverty all his life and never ate meat), it hardly seems surprising that he was named the confessor to the Infanta Isabella. From a young age, Torquemada was her friend and confidante and his control over her became absolute. No matter how reluctant she might have been to carry out Torquemada's plan to root out heresy, he could always persuade her. After she gave her permission, Torquemada and Ojeda received authorization from Pope Sixtus IV in 1481 to set up their tribunal and the Spanish Inquisition began with a vengeance.
It started with a single Tribunal in Seville where the "Jewish problem" was felt to be strongest. The rumours about the new Inquisition were unnerving enough for the neo-Christians of Seville. Actually seeing the white-robed black-hooded Inquisitors in a formal procession (headed by a Dominican carrying a white cross) on their way to the Convent of St. Paul where the Inquisition was to be based was enough for thousands of converted Jews to flee to other regions for safety. Of course, simply fleeing the Inquisition was assumed to be evidence of guilt and was used against them in their eventual trials. An edict published in January 2, 1481 was sent out to all parts of Spain ordering the return of refugees with stiff penalties for anyone harboring them (including excommunication). Any nobles rash enough to ignore the edict would have their lands confiscated. The threats were effective and many refugees were forcibly returned to Seville (often in chains). The edict was so successful in fact that the Convent was overwhelmed by the number of prisoners and the Inquisitors then moved to a larger castle.
Then came the "Edict of Grace" offering amnesty to all heretics who turned themselves into the Inquisiton and repented of their sinful ways. Over 20,000 conversos took advantage of the edict but discovered to their horror that the offer was conditional (which the published Edict hadn't mentioned). The repentance had to be sincere, which meant that the self-confessed heretics would have to name all of their fellow heretics as well. To save themselves, those conversos who had confessed were forced to name fellow "Judaizers", often friends or family members, or else have their confessions used against them in the resulting trial. As it was, the Edict had a limited grace period. Once that expired, no mercy would be possible.