Contact with Europe was established in 1508, when the Portuguese conquered parts of Oman's coastal region. Portugal's influence predominated for more than a century. Fortifications built during the Portuguese occupation can still be seen at Muscat.

Except for a period when Persia conquered parts of Oman, Oman has been an independent nation. After the Portuguese were expelled in 1650 and while resisting Persian attempts to establish hegemony, the Sultan of Oman extended his conquests to Zanzibar, other parts of the eastern coast of Africa, and portions of the southern Arabian Peninsula. During this period, political leadership shifted from the Ibadhi imams, who were elected religious leaders, to hereditary sultans who established their capital in Muscat. The Muscat rulers established trading posts on the Persian coast and also exercised a measure of control over the Makran coast (now Pakistan). By the early 19th century, Oman was the most powerful state in Arabia and had a major presence on the East African coast.

Oman was the object of Franco-British rivalry throughout the 18th century. During the 19th century, Oman and the United Kingdom concluded several treaties of friendship and commerce. In 1908, the British entered into an agreement of friendship. Their traditional association was confirmed in 1951 through a new treaty of friendship, commerce, and navigation by which the United Kingdom recognized the Sultanate of Oman as a fully independent state.

When Sultan Sa'id bin Sultan Al-Busaid died in 1856, his sons quarreled over his succession. As a result of this struggle, the Omani empire--through the mediation of the British Government under the "Canning Award"--was divided in 1861 into two separate principalities--Zanzibar, with its East African dependencies, and Muscat and Oman. Zanzibar paid an annual subsidy to Muscat and Oman until its independence in early 1964.

During the late 19th and early to mid-20th centuries, the sultan in Muscat faced rebellion by members of the Ibadhi sect residing in the interior of Oman, centered around the town of Nizwa, who wanted to be ruled exclusively by their religious leader, the Imam of Oman. This conflict was resolved temporarily by the Treaty of Seeb in 1920, which granted the imam autonomous rule in the interior, while recognizing the sovereignty of the sultan elsewhere.

Following the discovery of oil in the interior, the conflict flared up again in 1954, when the new imam led a sporadic 5-year rebellion against the sultan's efforts to extend government control into the interior. The insurgents were defeated in 1959 with British help. The sultan then terminated the Treaty of Seeb and eliminated the office of the imam. In the early 1960s, the imam, exiled to Saudi Arabia, obtained support from his hosts and other Arab governments, but this support ended in the 1980s.

In 1964, a separatist revolt began in Dhofar Province. Aided by communist and leftist governments such as the former South Yemen (People's Democratic Republic of Yemen), the rebels formed the Dhofar Liberation Front, which later merged with the Marxist-dominated Popular Front for the Liberation of Oman and the Arab Gulf (PFLOAG). The PFLOAG's declared intention was to overthrow all traditional Arab Gulf regimes. In mid-1974, PFLOAG shortened its name to the Popular Front for the Liberation of Oman (PFLO) and embarked on a political rather than a military approach to gain power in the other Gulf states, while continuing the guerrilla war in Dhofar.

With the help of British advisors, Sultan Qaboos bin Sa'id assumed power on July 23, 1970, in a palace coup directed against his father, Sa'id bin Taymur, who later died in exile in London. The new sultan was confronted with insurgency in a country plagued by endemic disease, illiteracy, and poverty. One of the new sultan's first measures was to abolish many of his father's harsh restrictions, which had caused thousands of Omanis to leave the country, and to offer amnesty to opponents of the previous regime, many of whom returned to Oman. He also established a modern government structure and launched a major development program to upgrade educational and health facilities, build a modern infrastructure, and develop the country's natural resources.

In an effort to end the Dhofar insurgency, Sultan Qaboos expanded and re-equipped the armed forces and granted amnesty to all surrendered rebels while vigorously prosecuting the war in Dhofar. He obtained direct military support from the U.K., Iran, and Jordan. By early 1975, the guerrillas were confined to a 50 square kilometer (20-sq. mi.) area near the Yemen border and shortly thereafter were defeated. As the war drew to a close, civil action programs were given priority throughout Dhofar and helped win the allegiance of the people. The PFLO threat diminished further with the establishment of diplomatic relations in October 1983 between South Yemen and Oman, and South Yemen subsequently lessened propaganda and subversive activities against Oman. In late-1987, Oman opened an embassy in Aden, South Yemen, and appointed its first resident ambassador to the country.

Since his accession in 1970, Sultan Qaboos has balanced tribal, regional, and ethnic interests in composing the national administration. The Council of Ministers, which functions as a cabinet, consists of 30 ministers (but only 28 ministries), all directly appointed by Qaboos. The bicameral Majlis Oman’s mandate is to review legislation pertaining to economic development and social services prior to its becoming law. The elected Majlis al-Shura (Consultative Council) may request ministers to appear before it. In early 2003, Sultan Qaboos declared universal suffrage for the October 2003 Majlis al-Shura elections. Two women were elected to sit with 81 male colleagues in those elections, which were observed to be free and fair. Roughly 194,000 Omani men and women, or 74% of registered voters, participated in the elections. Since 2003, Sultan Qaboos has also expanded the Majlis al-Dawla, or State Council, to 59 members from 53, including nine women. The State Council acts as the upper chamber in Oman's bicameral representative body.

In November 1996, Sultan Qaboos presented his people with the "Basic Statute of the State," Oman's first written "constitution." It guarantees various rights within the framework of Shariah and customary law. It partially resuscitated long dormant conflict-of-interest measures by banning cabinet ministers from being officers of public shareholding firms. Perhaps most importantly, the Basic Statute provides rules for the royal succession.

The northern tip of Oman, called the Musandam Peninsula, is strategically located on the Strait of Hormuz, the entrance to the Gulf, 35 miles directly opposite Iran. Oman is concerned with regional stability and security, given tensions in the region, the proximity of Iran and Iraq, and the potential threat of political Islam. Oman maintained its diplomatic relations with Iraq throughout the Gulf War while supporting the UN allies by sending a contingent of troops to join coalition forces and by opening up to prepositioning of weapons and supplies. In addition, since 1980 Oman and the U.S. have been parties to a military cooperation agreement, which was revised and renewed in 2000. Oman also has long been an active participant in efforts to achieve Middle East peace.