The first Europeans to arrive in the region were Portuguese in 1515. Dominican friars established a presence on the island in 1556, and the territory was declared a Portuguese colony in 1702. Following a Lisbon-instigated decolonisation process in 1974, Indonesia invaded the territory in 1975 ending Portuguese rule.
Over the following three centuries, the Dutch would come to dominate the Indonesian archipelago with the exception of the eastern half of Timor, which would become Portuguese Timor. The Portuguese introduced maize as a food crop and coffee as an export crop. Timorese systems of tax and labour control were preserved, through which taxes were paid through their labour and a portion of the coffee and sandalwood crop. The Portuguese introduced mercenaries into Timor communities and Timor chiefs hired Portuguese soldiers for wars against neighbouring tribes. With the use of the Portuguese musket, Timorese men became deer hunters and suppliers of deer horn and hide for export.
The Portuguese introduced Catholicism to East Timor, the Roman writing system, the printing press, and formal schooling. Two groups of people were introduced to East Timor; Portuguese men, and Portuguese Asians. Portuguese language was introduced into church and state business, and Portuguese Asians used Malay in addition to Portuguese. Under colonial policy, Portuguese citizenship was available to men who assimilated Portuguese language, literacy, and religion; by 1970, 1,200 East Timorese, largely drawn from the aristocracy, Dili residents, or larger towns, had obtained Portuguese citizenship. By the end of the colonial administration in 1974, 30 percent of Timorese were practicing Catholics while the majority continued to worship spirits of the land and sky.
The capital was moved to Dili in 1767, due to attacks from the Dutch, who were colonising the rest of the island and the surrounding archipelago that is now Indonesia. The border between Portuguese Timor and the Dutch East Indies was formally decided in 1859 with the Treaty of Lisbon. In 1913, the Portuguese and Dutch formally agreed to split the island between them. The definitive border was drawn by the Hague in 1916, and it remains the international boundary between the modern states of East Timor and Indonesia.
For the Portuguese, East Timor remained little more than a neglected trading post until the late nineteenth century. Investment in infrastructure, health, and education was minimal. Sandalwood remained the main export crop with coffee exports becoming significant in the mid-nineteenth century. In places where Portuguese rule was asserted, it tended to be brutal and exploitative.
At the beginning of the twentieth century, a faltering home economy prompted the Portuguese to extract greater wealth from its colonies, resulting in increased resistance to Portuguese rule in East Timor. In 1910-12, a Timorese rebellion was quashed after Portugal brought in troops from its colonies in Mozambique and Macau, resulting in the deaths of 3,000 East Timorese.
Although Portugal was neutral during World War II, in December 1941, Portuguese Timor was occupied by Australian and Dutch forces, which were expecting a Japanese invasion. Thousands of Japanese occupied Timor, in February 1942, and the borders of the Dutch and Portuguese were overlooked with Timor island being made a single Japanese army administration zone. 400 Australian and Dutch commandos trapped on the island by the Japanese invasion waged a guerrilla campaign, which tied up Japanese troops and inflicted over 1,000 casualties. Timorese helped the guerillas but following the allies eventual evacuation, Japanese retribution from their soldiers and Timorese militia raised in West Timor was severe. By the end of the War, an estimated 40-60,000 Timorese had died, the economy was in ruins, and famine widespread. (see Battle of Timor).
Following World War II, the Portuguese promptly returned to reclaim their colony, while West Timor became part of Indonesia which secured its independence. To rebuild the economy, colonial administrators forced local chiefs to supply labourers which further damaged the agricultural sector. The role of the Catholic Church in East Timor grew following the Portuguese government handing over the education of the Timorese to the Church in 1941. In post war Portuguese Timor, primary and secondary school education levels significantly increased albeit on a very low base. Although illiteracy in 1973 was estimated at 93 per cent of the population, the small educated elite of East Timorese produced by the Church in the 1960s and 70s, became the independence leaders during the Indonesian occupation.
The following year, East Timorese declared the territory's independence.
In December 1975, Indonesia invaded the territory declaring it Indonesia's 27th province in 1976. The United Nations, however, did not recognise the annexation. The last governor of Portuguese Timor was Mário Lemos Pires from 1974-75. Following the end of Indonesian occupation in 1999, and a United Nations administered transition period, East Timor became independent in 2002.