Queen Margaret of Austria, wife of Philip III, founded Madrid's Royal Monastery of La Encarnación for Augustinian Recollect nuns. Planning began around 1611 beside the royal Alcázar, close enough for a private passage to connect court and convent. The foundation expressed Margaret's intense Catholic piety and Habsburg dynastic identity. It was also associated with celebration of the crown's 1609 expulsion of the Moriscos, a coercive mass removal whose human cost complicates the monastery's traditional presentation as a purely devotional gift.

The architect and friar Alberto de la Madre de Dios designed the complex between 1611 and 1616. Its restrained granite-and-brick façade, ordered around a simple portal, window, and triangular pediment, helped establish a sober court-convent type imitated across Spain. Behind it, church, cloister, cells, chapels, service rooms, gardens, and royal spaces supported a strictly enclosed community. The monastery opened in 1616, five years after Margaret's death, and attracted women from noble families whose dowries, relatives, and court connections enriched the institution.

Royal patronage filled La Encarnación with paintings, sculpture, textiles, silver, reliquaries, and liturgical music. Nuns were enclosed but not socially disconnected: correspondence, confessors, servants, donors, and female kin linked the cloister to court politics. Noble women could find education, authority, and spiritual vocation within constraints created by family strategy and gender. The building's proximity to the palace made ceremonies and visits part of a ritual landscape through which monarchy publicly displayed Catholic legitimacy.

The church interior was substantially transformed in the eighteenth century under Ventura Rodríguez. A new decorative scheme, ceiling frescoes by Francisco Bayeu, an Annunciation by Vincenzo Carducho, and sculpture by artists including Gregorio Fernández created a layered Baroque setting within the earlier shell. The reliquary contains objects associated with saints, including a vial traditionally said to hold the blood of Saint Pantaleon that liquefies around his feast day. Such traditions sustain living devotion but are matters of belief rather than scientific historical proof.

War and political reform repeatedly threatened Spanish religious houses. Napoleonic occupation disrupted Madrid, and nineteenth-century confiscation policies closed or stripped many monasteries. La Encarnación survived partly because of its royal status, though buildings and community life changed. The destruction of the old Alcázar and creation of the present Royal Palace altered its urban relationship; the direct courtly world for which it had been designed disappeared. Patrimonio Nacional eventually assumed care of its artistic collections alongside the continuing enclosed community.

Parts of the monastery opened for guided public visits in 1965, creating a careful boundary between museum access and cloistered life. Conservation must protect fragile artworks and interiors while respecting worship and privacy. La Encarnación is valuable not only for austere architecture and court art, but for the histories of women who lived there and the minorities excluded by the monarchy that founded it. The monastery remains a rare living institution where Habsburg politics, female religious community, Baroque collecting, devotional tradition, and modern heritage management intersect. Its continuing enclosure also limits what outsiders may see, a constraint that preserves the institution's actual purpose and distinguishes respectful visitation from total museum possession.