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Augsburg became the base of two banking families that rose to great prominence, the Fuggers and the Welsers.

In 1530, the Augsburg Confession was presented to the Holy Roman Emperor at the Diet of Augsburg.Following the Peace of Augsburg in 1555, after which the rights of religious minorities in imperial cities were to be legally protected, a mixed Catholic–Protestant city council presided over a majority Protestant population; see Paritätische Reichsstadt.Religious peace in the city was largely maintained despite increasing Confessional tensions until the Thirty Years' War (1618–1648).In 1629, Holy Roman Emperor Ferdinand II issued the Edict of Restitution, which restored the legal situation of 1552 and again curtailed the rights of the Protestant citizens.This gives Augsburg more legal holidays than any other region or city in Germany.

Augsburg lies at the convergence of the Alpine rivers Lech and Wertach and on the Singold.With a strategic location as intersection of trade routes to Italy, the Free Imperial City became a major trading center.Augsburg produced large quantities of woven goods, cloth and textiles.Augsburg was granted the status of a Free Imperial City on March 9, 1276 and from then until 1803, it was independent of its former overlord, the Prince-Bishop of Augsburg.Frictions between the city-state and the prince-bishops were to remain frequent however, particularly after Augsburg became Protestant and curtailed the rights and freedoms of Catholics.The inequality of the Edict of Restitution was rescinded when in April 1632, the Swedish army under Gustavus Adolphus captured Augsburg without resistance.