However, in 1524, Pope Clement VII allowed Carafa to resign his benefices and join the ascetic order of Saint Cajetan, popularly called the Theatines, after Cardinal Carafa, bishop of Theate. Following the sack of Rome in 1527, the order moved to Venice. But Carafa was recalled to Rome by the reform-minded Pope Paul III (1534–49), to sit on a committee of reform of the papal court, an appointment that forecast an end to a humanist papacy, and a revival of scholasticism, for Carafa was a thorough disciple of Thomas Aquinas. In December 1536 he was made a cardinal and then Archbishop of Naples. He reorganized the Inquisition in Italy.
He was a surprise choice as pope to succeed Pope Marcellus II (1555); his rigid, severe and unbending character combined with his age and patriotism meant he would have declined the honor. He accepted apparently because Emperor Charles V was opposed to his accession. As pope his nationalism was a driving force; he used the office to preserve some liberties in the face of four-fold foreign occupation. The Habsburgs disliked Paul IV and he allied with France, possibly against the true interests of the Papacy. He also alienated Protestants in England and rejected the claim of Elizabeth I of England to the Crown. The strengthening of the Inquisition continued and Paul IV's rectitude meant that few could consider themselves safe by virtue of position in his drive to reform the Church; even cardinals he disliked could be imprisoned.
Paul IV believed in extra ecclesiam nulla salus. In 1555 he issued a canon (papal law), Cum nimis absurdum, by which the Roman Ghetto was created. Jews were then forced to live in seclusion in a specified area of the rione Sant'Angelo, locked in at night, and he decreed that Jews should wear a distinctive sign, yellow hats for men and veils or shawls for women. The following Popes would have enforced the creation of other ghettos in most Italian towns. Under conservative pressure from Pope Pius IX (1846–78), the Roman ghetto was the last ghetto to be abolished in Western Europe.
Paul IV was violently opposed to the liberal Giovanni Cardinal Morone whom he strongly suspected of being a hidden Protestant, so much that he had him imprisoned. In order to prevent Morone from succeeding him and imposing what he believed to be his Protestant beliefs on the Church, Pope Paul IV codified the Catholic Law excluding heretics and non-Catholics from receiving or legitimately becoming Pope, in the bull Cum ex apostolatus officio.
Paul IV introduced the Index Librorum Prohibitorum or "Index of Prohibited Books" to Venice, then an independent and prosperous trading state, in order to crack down on the growing threat of Protestanism and the newly introduced printing press. Under his authority, all books written by Protestants were banned, together with Italian and German translations of the Latin Bible.
As was usual with Renaissance popes, Paul IV sought to advance the fortunes of his family as well as that of the papacy. As Cardinal-nephew, Carlo Carafa became his uncle's chief adviser and the prime mover in their plans to ally with the French to expel the Spanish from Italy. Carlo's older brother Giovanni was made commander of the papal forces and Duke of Paliano after the pro-Spanish Colonna were deprived of that town in 1556. Another nephew, Antonio, was given command of the Papal guard and made Marquis of Montebello. Their conduct became notorious in Rome. However at the conclusion of the disastrous war with Philip II of Spain and after many scandals, in 1559 the Pope publicly disgraced his nephews and banished them from Rome.