In various forms, Denmark has had colonial possessions beginning in the 13th century, when it obtained possessions in Estonia. In 1536, Denmark entered into a personal union with Norway, and the new entity of Denmark-Norway took possession of the Norwegian holdings of Greenland, the Faroe Islands, and Iceland. Orkney and Shetland, then held by Scotland, had originally been ruled by Norway until the 15th century, and several later attempts were made to retake them. In the 17th century, following territorial losses on the Scandinavian Peninsula, Denmark-Norway began to develop colonies, forts, and trading posts in Africa, the Caribbean, and India. After 1814, when Norway was granted to Sweden following the Napoleonic Wars, Denmark retained the colonial holdings.

Christian IV first initiated the policy of expanding Denmark's overseas trade, as part of the mercantilist wave that was sweeping Europe. Denmark's first colony was established at Tranquebar (Danish: Trankebar) on India's southern coast in 1620. Admiral Ove Gjedde led the expedition that established the colony. Today, the only remaining vestiges of this empire are the Faroe Islands and Greenland; the Faroes were a Danish county until 1948, while Greenland's colonial status ceased in 1953. They are now autonomous regions of the Kingdom of Denmark (Danish Realm) with home rule.

The Colonial empires were a product of the European Age of Exploration (or Age of Sail) that began with a race of exploration between the then most advanced maritime powers, Portugal and Spain, in the 15th century. The initial impulse behind these dispersed maritime empires and those that followed was trade, driven by the new ideas and the capitalism that grew out of the European Renaissance. Agreements were also done to divide the world up between them in 1479, 1493, and 1494.

Portugal began establishing the first global trade network and empire under the leadership of Henry the Navigator. Portugal would eventually establish colonial domains from Brazil, in South America, to several colonies in Africa (namely Portuguese Guinea, Cape Verde, São Tomé and Príncipe, Angola and Mozambique), in Portuguese India (most importantly Bombay and Goa), in China (Macau), and Oceania (most importantly Timor, namely East Timor), amongst many other smaller or short-lived possessions (see Evolution of the Portuguese Empire).