Succeeding his father, Gustav I Vasa, in 1560, Erik soon obtained passage of the Articles of Arboga (1561), curtailing the powers of his half brothers, who had been granted large duchies by Gustav I. He consolidated his authority by establishing a special royal court of appeal and installing a new constitution (1562) that defined the nobility's military obligations.

Erik's major foreign policy objective was to free Sweden's Baltic Sea trade from Danish control. He first sought allies in western Europe, unsuccessfully bidding for the hand of Elizabeth I of England. Realizing the advantage of controlling ports on the eastern Baltic coast, he obtained sovereignty (1561) over Reval (now Tallinn, Est.) and its adjacent territories. Meanwhile, his half brother John (John III), duke of Finland, also sought a foothold in the east and signed a treaty with Sigismund II Augustus, king of Poland, agreeing to marry the king's daughter against Erik's wishes. Erik imprisoned John and his wife the following year.

Erik's acquisitions in Estonia alarmed Frederick II, king of Denmark and Norway, who allied with Lübeck and Poland and declared war in 1563, initiating the Seven Years' War of the North. The Swedish king led his forces with moderate effectiveness and was able to gain a stalemate with Denmark in the first years of the war. His fear of treason caused his judgment to break down in 1567, and he ordered the killing of the powerful Sture family's leading members. His adviser, Jöran Persson, was imprisoned for the crime.

After regaining his mental composure, Erik restored the hated Persson; he then had his commoner mistress, Karin Månsdotter, crowned queen over the objections of the nobility. Duke John (later King John III), who was liberated in 1567, joined with his brother, the future Charles IX, and deposed Erik in 1568. Erik died in prison.