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Vatican City is a sovereign landlocked enclave surrounded by Rome in Italy. The modern-day home of the popes, it is the smallest independent state in the world in terms of area and population. Vatican City is considered a non-hereditary elective monarchy with the Pope that wields absolute authority. The borders of the Vatican City are coextensive with the Holy See, the ecclesiastical seat of the Roman Catholic Church and its Eastern Rite.

Created in 1929 to provide a territorial identity for the Holy See in Rome, the State of the Vatican City is a recognized national territory under international law. On this basis, the Holy See enters into international agreements and both receives and sends diplomatic representatives. Due to the very limited territory of the Vatican state, foreign embassies to the Holy See are located in the Italian part of Rome. The Holy See is a permanent observer in the United Nations, and in July, 2004, gained all the rights of full membership except voting.

The Head of State of the Vatican City is the Pope who exercises supreme legislative, executive and judicial power not only over Vatican City but also over the coextensive Holy See. The Pope delegates the internal administration of the Vatican City to the Pontifical Commission for the State of the Vatican City. The Heads of Government are the Secretary of State and Governor of Vatican City (sometimes referred to as the President of Vatican City). The governance of the Holy See is separate, consisting of the Roman Curia in turn consisting of members of the College of Cardinals. The Heads of Government are concurrently agents of the Roman Curia.

The Pope is elected for a life term in conclave by cardinals under the age of 80. During a sede vacante (papal vacancy), after the death of a Pope and before the election of the new one, the Chamberlain of the Holy Roman Church, former Secretary of State, and former President of the Pontifical Commission form a commission that performs some of the functions of the head of state; while another made up of the Chamberlain and three cardinals (one being chosen by lot every three days from each order of cardinals), performs other functions of the head of state. All decisions of these commissions must be approved by the College of Cardinals.

The term Holy See refers to the composite of the authority, jurisdiction, and sovereignty vested in the Pope and his advisors to direct the worldwide Roman Catholic Church. As the "central government" of the Roman Catholic Church, the Holy See has a legal standing that allows it to enter into treaties as the juridical equal of a state. The Pope rules the Holy See through the Roman Curia and the Papal Civil Service. The Roman Curia consists of the Secretariat of State, nine Congregations, three Tribunals, 11 Pontifical Councils, and a complex of offices that administer church affairs at the highest level.

The Pope appoints cardinals to seats in the Roman Curia with specific authority to administer Vatican City. The chief executive is the Governor of Vatican City (often called President of Vatican City). He is given the duties normally assigned to a premier or prime minister in other countries. The chief executive of the larger Roman Catholic Church is the Secretary of State, specifically responsible for the foreign relations of Vatican City and acting like the Vatican's foreign minister. Legislative power is given to the Pontifical Commission for Vatican City State - members are appointed by the Pope to terms of five years. The legal system is based on canon, or ecclesiastical, law; if canon law is not applicable, the laws of the city of Rome apply. Three tribunals are responsible for judicial power. The Apostolic Penitentiary deals with matters of conscience, the Sacra Rota is responsible for appeals, including annulments of marriage, and the Apostolic Signatura is the final court of appeal.

Among the most active of the major Curial institutions are:

• the Congregation for the Doctrine of the Faith, which oversees church doctrine;
• the Congregation for Bishops, which coordinates the appointment of bishops worldwide;
• the Congregation for the Evangelization of Peoples, which oversees all missionary activities;
• the Pontifical Council for Justice and Peace, which deals with international peace and social issues;
• the Prefecture for Economic Affairs coordinates the finances of the Holy See departments and supervises the administration of the Patrimony of the Holy See, an investment fund dating back to the Lateran Pacts.

A committee of 15 cardinals, chaired by the Secretary of State, has final oversight authority over all financial matters of the Holy See, including those of the Institute for Works of Religion (Istituto per le Opere di Religione, IOR), the Vatican bank.

The Vatican City maintains the Swiss Guards, a voluntary military force, as well as a modern security corps. The Vatican also issues its own coins and stamps and controls its own internet domain (.va). Radio Vatican, the official radio station. L'Osservatore Romano is the semi-official newspaper, published daily in Italian, and weekly in English, Spanish, Portuguese, German, and French (plus a monthly edition in Polish). It is published by Catholic laymen but carries official information.

The Vatican citizenship is reserved to the cardinals resident in Vatican City and Rome, to the employees of the Vatican only for the duration of the position, and to people having the citizenship granted by the Popes, like consorts and children of other citizens. Nevertheless the Vatican citizenship is lost at the end of the previous positions, so that the population is temporary, without possibility of growth and without the rights usually owned by normal citizens.