Uruguay has traditionally been more affluent than other countries in South America, and is known for its advanced education and social security systems and liberal social laws.
It was the first nation in Latin America to establish a welfare state, maintained through relatively high taxes on industry, and developed a democratic tradition that earned it the sobriquet "the Switzerland of South America".
But economic and political turmoil, in particular left-wing urban guerrilla attacks in the early 1970s, led the government of the day to suspend the constitution and launch a period of repressive military rule that lasted until 1985.
Since the restoration of democratic government, successive governments have liberalised the economy. Colonial towns, beach resorts and a year-round mild climate have contributed to a growing tourist industry.
President: Tabare Vazquez
Mr Vazquez's decisive victory in the 2014 run-off presidential election over right-wing challenger Luis Lacalle Pou cemented left-wing rule for another five years.
A cancer doctor by profession, Tabare Vazquez served as president in 2005-2010, being succeeded by his party colleague Jose Mujica. Uruguayan presidents do not serve consecutive terms.
Mr Vazquez pledged to focus more attention on improving education standards and fighting crime, while maintaining the generous social welfare policies of Mr Mujica.
Uruguayans can access a wide range of views via hundreds of privately-owned media outlets.
The state of media freedom is healthy and Uruguay has been praised for setting up an independent broadcasting regulator.
Some key dates in Uruguay's history:
1726 - Spanish found Montevideo and take over Uruguay from the Portuguese; many of the indigenous people are killed.
1776 - Uruguay becomes part of the Vice-royalty of La Plata, which has its capital at Buenos Aires.
1830 - Independence.
1838-65 - Civil war between Blancos, or Whites - the future conservative party - and Colorados, or Reds - the future liberals.
1865-70 - War of the Triple Alliance. Uruguay joins Argentina and Brazil in war against Paraguay, which is defeated.
1903-07 and 1911-15 - President Jose Batlle y Ordonez helps expand cattle ranching, introduces major social reforms.
1933 - Gabriel Terra abolishes National Council.
1960s - Emergence of the leftist Tupamaros group, which stages guerrilla attacks. The military launches a brutal counterinsurgency.
1973-85 - Military rule characterised by extreme repression.
2013 - Uruguay becomes the first country to legalise the cultivation, sale and consumption of marijuana for recreational use, as a measure to counter drug cartels.