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Like all the people of central Europe, the Habsburgs emerged from the Thirty Years’ War impoverished and exhausted. Their efforts to destroy Protestantism in the German lands and to turn the weak Holy Roman Empire into a real state had failed. Although the Habsburgs remained the hereditary emperors, real power lay in the hands of a bewildering variety of separate political jurisdictions. Defeat in central Europe encouraged the Habsburgs to turn away from a quest for imperial dominance and to focus inward and eastward in an attempt to unify their diverse holdings. If they could not impose Catholicism in the empire, at least they could do so in their own domains.

Habsburg victory over Bohemia during the Thirty Years’ War was an important step in this direction. Ferdinand II (r. 1619–1637) drastically reduced the power of the Bohemian Estates, the largely Protestant representative assembly. He also confiscated the landholdings of Protestant nobles and gave them to loyal Catholic nobles and to the foreign aristocratic mercenaries who led his armies. After 1650 a large portion of the Bohemian nobility was of recent origin and owed its success to the Habsburgs.

With the support of this new nobility, the Habsburgs established direct rule over Bohemia. Under their rule the condition of the enserfed peasantry worsened substantially: three days per week of unpaid labor became the norm. Protestantism was also stamped out. These changes were significant advances in creating absolutist rule in Bohemia.

Ferdinand III (r. 1637–1657) continued to build state power. He centralized the government in the empire’s German-speaking provinces, which formed the core Habsburg holdings. For the first time, a permanent standing army was ready to put down any internal opposition. The Habsburg monarchy then turned east toward the plains of Hungary, which had been divided between the Ottomans and the Habsburgs in the early sixteenth century. Between 1683 and 1699 the Habsburgs pushed the Ottomans from most of Hungary and Transylvania. The recovery of all the former kingdom of Hungary was completed in 1718.

The Hungarian nobility, despite its reduced strength, effectively thwarted the full development of Habsburg absolutism. Throughout the seventeenth century Hungarian nobles rose in revolt against attempts to impose absolute rule. They never triumphed decisively, but neither were they crushed the way the nobility in Bohemia had been in 1620. In 1703, with the Habsburgs bogged down in the War of the Spanish Succession, the Hungarians rose in one last patriotic rebellion under Prince Francis Rákóczy. The prince and his forces were eventually defeated, but the Habsburgs agreed to restore many of the traditional privileges of the aristocracy in return for Hungarian acceptance of hereditary Habsburg rule. Thus Hungary, unlike Austria and Bohemia, was never fully integrated into a centralized, absolute Habsburg state.

Despite checks on their ambitions in Hungary, the Habsburgs made significant achievements in state-building elsewhere by forging consensus with the church and the nobility. A sense of common identity and loyalty to the monarchy grew among elites in Habsburg lands, even to a certain extent in Hungary. German became the language of the state, and zealous Catholicism helped fuse a collective identity.

Vienna became the political and cultural center of the empire. By 1700 it was a thriving city with a population of one hundred thousand and its own version of Versailles, the royal palace of Schönbrunn.