Maurice was unscrupulous and intrigued with Henry II of France against the Emperor, who professed himself the Protector of the Princes of the Empire. A formidable army was raised, which took Charles at a disadvantage and drove him from Germany. The Peace of Augsburg, 1555, formally established Protestantism over a great part of the empire.
The Emperor felt uneasily that the star of the House of Austria was setting. After his failure to crush the heretics, he was troubled by ill-health and the gloomy spirit which he inherited from his mother Joanna. He was weary of travelling from one part of his dominions to another, and knew that he could never win more fame and riches than he had enjoyed. His son Philip was old enough to reign in his stead if he decided to cede the sovereignty. The old Roman Catholic faith drew him apart from the noise and strife of the world by its promise of rest and all the solaces of retirement.
In 1555 the Emperor held the solemn ceremony of abdication at Brussels, for he paid especial honour to his subjects of the Netherlands. He sat in a chair of state surrounded by a splendid retinue and recounted the famous deeds of his administration with a natural pride, dwelling on the hardships of constant journeying because he had been unwilling to trust the affairs of government to any other. Turning to Philip he bade him hold the laws of his country sacred and to maintain the Catholic faith in all its purity. As he spoke, all his hearers melted into tears, for the people of the Netherlands owed much gratitude to their ruler. And the ceremony which attended the transference of the Spanish crown to Philip was no less moving. Charles had chosen the monastery of San Yuste as his last dwelling on account of its warm, dry climate. After a tender farewell to his family he set out there in some state, many attendants going into retreat with him. Yuste was a pleasant peaceful village near the Spanish city of Plasencia. Deep silence brooded over it, and was only broken by the bells of the convent the Emperor was entering. He found that a building had been erected for his "palace" in a garden planted with orange trees and myrtles. This was sumptuously furnished according to the monks' ideas, for Charles did not intend to adopt the simplicity of these brothers of St Jerome. Velvet canopies, rich tapestries, and Turkey carpets had been brought for the rooms which were prepared for a royal inmate. The walls of the Emperor's bedchamber were hung in black in token of his deep mourning for his mother, but many pictures from the brush of Titian were hung in that apartment. As Charles lay in bed he could see the famous "Gloria," which represented the emperor and empress of a bygone age in the midst of a throng of angels. He could also join in the chants of the monks without rising, if he were suffering from gout, for a window opened directly from his room into the chapel of the monastery. Sixty attendants were still in the service of the recluse, and those in the culinary office found it hard to satisfy the appetite of a monarch who, if he had given up his throne, had not by any means renounced the pleasures of the table.
A Keeper of the Wardrobe had been brought to Yuste, although Charles was plain in his attire and had somewhat disdained the personal vanity of his great rivals. He was parsimonious in such matters and hated to see good clothes spoilt, as he showed when he removed a new velvet cap in a sudden storm and sent to his palace for an old one! He observed fast-days, though he did not dine with the monks, and he lived the regular life of the monastery. The monks grew restive under the constant supervision which he exercised, and one of them is said to have remonstrated with the royal inmate, saying, "Cannot you be contented with having so long turned the world upside down, without coming here to disturb the quiet of a convent?"
Charles amused many hours of leisure by mechanical employments in which he was assisted by one Torriano, who constructed a sundial in the convent-garden. He had a great fancy for clocks, and had a number of these in his royal apartments. The special triumphs of Torriano were some tin soldiers, so constructed that they could go through military exercises, and little wooden birds which flew in and out of the window and excited the admiring wonder of the monks walking in the convent garden.
Many visitors were received by the Emperor in his retirement. He still took an interest in the events of Europe, and received with the deepest sorrow the news that Calais had been lost by Philip's English wife. He was always ready to give his successor advice, and became more and more intolerant in religious questions. "Tell the Grand Inquisitor from me," he wrote, "to be at his post and lay the axe to the root of the tree before it spreads further. I rely on your zeal for bringing the guilty to punishment and for having them punished without favour to anyone, with all the severity which their crimes demand." After this impressive exhortation to Philip, he added a codicil to his will, conjuring him earnestly to bring to justice every heretic in his dominions.