In February 1608, at the Diet (Reichstag) of the Holy Roman Empire, the Catholic princes introduced a motion calling for the restitution of all recently secularized church lands. When it was rejected, a group of Protestant princes submitted a formal protest and walked out of the Diet. Six of them—the elector Palatine of the Rhine, the dukes of Neuburg and Württemberg, and the margraves of Baden-Durlach, Ansbach, and Kulmbach—then gathered in the secularized monastery at Auhausen, near Nördlingen in southern Germany, and on May 14 they formed a defensive union for 10 years, pledging mutual support in case of attack. Although the elector Palatine served as “director” of the union, its leading spirit was the chairman of its military council, Prince Christian of Anhalt-Bernburg, and he immediately sought to expand the alliance. Before long, nine princes and 17 towns joined, while England, the Dutch Republic, and Sweden all promised support. These developments provoked the counteralliance of the Catholic League (1609) under Duke Maximilian I of Bavaria.

From the outset, internal strife between the union's Lutheran (Lutheranism) and Calvinist (Calvinism) members and between the cities and the territorial magnates undermined its strength. The powerful Protestant elector of Saxony refused to join, and by 1617, when the union came up for renewal, several members had defected (notably the elector of Brandenburg). Although the remaining members agreed to renew their pact for another four years, they stipulated that the union would mobilize only to defend the existing territories of a member. The importance of this qualification emerged in 1619 when the Bohemian estates offered their crown to Elector Frederick V of the Upper Palatinate, the union's director: its members made clear that they would defend only his German territories. The following year they even complained that he was spending too long in Bohemia and threatened to withhold his salary as director. Admittedly, when the Catholic League mobilized, the Protestant Union also raised troops; but soon afterward it agreed to a neutrality pact (the Treaty of Ulm, July 3, 1620) by which both sides agreed not to attack each other. This freed the Catholic League's army to invade Bohemia, leading to the defeat of Frederick and Anhalt at the Battle of White Mountain (White Mountain, Battle of). With the Catholics triumphant and with Frederick and Anhalt in exile, the Protestant Union dissolved itself on April 12, 1621.