Maximilian, on the death of Mary, found himself in a very difficult position. The archduke was a man of high-soaring ideas, chivalrous, brave even to the point of audacity, full of expedients and never daunted by failure, but he was deficient in stability of character, and always hampered throughout his life by lack of funds. He had in 1477 set himself to the task of defending Flanders and the southern provinces of the Netherlands against French attack, and not without considerable success. In 1482, as guardian of his four-year old son Philip, the heir to the domains of the house of Burgundy, he became regent of the Netherlands. His authority however was little recognised. Gelderland and Utrecht fell away altogether. Liege acknowledged William de la Marck as its ruler. Holland and Zeeland were torn by contending factions. Flanders, the centre of the Burgundian power, was specially hostile to its new governor. The burghers of Ghent refused to surrender to him his children, Philip and Margaret, who were held as hostages to secure themselves against any attempted infringement of their liberties. The Flemings even entered into negotiations with Louis XI; and the archduke found himself compelled to sign a treaty with France (December 23, 1482), one of the conditions being the betrothal of his infant daughter to the dauphin. Maximilian, however, found that for a time he must leave Flanders to put down the rising of the Hook faction in Holland, who, led by Frans van Brederode, and in alliance with the anti-Burgundian party in Utrecht, had made themselves masters of Leyden. Beaten in a bloody fight by the regent, Brederode nevertheless managed to seize Sluis and Rotterdam; and from these ports he and his daring companion-in-arms, Jan van Naaldwijk, carried on a guerrilla warfare for some years. Brederode was killed in a fight at Brouwershaven (1490), but Sluis still held out and was not taken till two years later.

Meanwhile Maximilian had to undertake a campaign against the Flemings, who were again in arms at the instigation of the turbulent burghers of Ghent and Bruges. Entering the province at the head of a large force he compelled the rebel towns to submit and obtained possession of the person of his son Philip (July, 1485). Elected in the following year King of the Romans, Maximilian left the Netherlands to be crowned at Aachen (April, 1486). A war with France called him back, in the course of which he suffered a severe defeat at Bethune. At the beginning of 1488 Ghent and Bruges once more rebelled; and the Roman king, enticed to enter Bruges, was there seized and compelled to see his friends executed in the market-place beneath his prison window. For seven months he was held a prisoner; nor was he released until he had sworn to surrender his powers, as regent, to a council of Flemings and to withdraw all his foreign troops from the Netherlands. He was forced to give hostages as a pledge of his good faith, among them his general, Philip of Cleef, who presently joined his captors.

Maximilian, on arriving at the camp of the Emperor Frederick III, who had gathered together an army to release his imprisoned son, was persuaded to break an oath given under duress. He advanced therefore at the head of his German mercenaries into Flanders, but was able to achieve little success against the Flemings, who found in Philip of Cleef an able commander. Despairing of success, he now determined to retire into Germany, leaving Duke Albert of Saxe-Meissen, a capable and tried soldier of fortune, as general-in-chief of his forces and Stadholder of the Netherlands. With the coming of Duke Albert order was at length to be restored, though not without a severe struggle.

Slowly but surely Duke Albert took town after town and reduced province after province into submission. The Hook party in Holland and Zeeland, and their anti-Burgundian allies in Utrecht, and Robert de la Marck in Liege, in turn felt the force of his arm. An insurrection of the peasants in West Friesland and Kennemerland - the "Bread and Cheese Folk," as they were called - was easily put down. Philip of Cleef with his Flemings was unable to make head against him; and, with the fall of Ghent and Sluis in the summer of 1492, the duke was able to announce to Maximilian that the Netherlands, except Gelderland, were pacified. The treaty of Senlis in 1493 ended the war with France. In the following year, after his accession to the imperial throne, Maximilian retired to his ancestral dominions in Germany, and his son, Philip the Fair, took in his hands the reins of government. The young sovereign, who was a Netherlander by birth and had spent all his life in the country, was more popular than his father; and his succession to the larger part of the Burgundian inheritance was not disputed. He received the homage of Zeeland at Roemerswaal, of Holland at Geertruidenburg, and seized the occasion to announce the abrogation of the Great Privilege, and at the same time restored the Grand Council at Mechlin.