It is a stony outcrop at the southern end of the Iberian peninsula, to which it is linked by a narrow isthmus. It marks the meeting point of the Mediterranean sea and the Atlantic ocean.
Is it strategically important?
In historical terms, it was one of the great maritime prizes; these days, given the awesome weaponry of the world's great powers and the range of their navies, it is a great deal less important.
How did Britain acquire sovereignty over Gibraltar?
Gibraltar was captured in 1704 during the war of Spanish succession by an Anglo-Dutch fleet. British sovereignty was formalised in 1713 by the treaty of Utrecht and Gibraltar became a British colony in 1830.
Spain has made several unsuccessful attempts to recapture it: the Rock has endured 15 sieges, the most famous of which started in 1779 and lasted more than three years. General Franco, the Spanish dictator, closed the border with Gibraltar in the 1940s and a second cut-off was imposed in the 60s.
How is Gibraltar ruled today?
The British governor's monopoly of legislative authority ended only in 1950, with the establishment of a legislative council. In 1963 Gibraltar's status came before the UN's special committee on decolonisation.
Spain tried to revive its claim to the Rock and increased restrictions at the border between Gibraltar and Spain, a process that culminated in the closure of the frontier and the end of direct communications with the mainland in 1969.
In the same year Britain granted Gibraltar a new constitution under which the functions of the legislative and city councils were merged and a Gibraltar House of Assembly was set up establishing self-government in domestic matters.
The constitution states that the sovereignty of the island will not be changed without the inhabitants' consent. Full independence, however, is not a realistic option as the Utrecht treaty specifies that Spain must have first refusal if the Rock's status ever changes.
Is Gibraltar part of the EU?
Gibraltar is the only British overseas territory to be technically part of the union, but it is not a member: the UK is responsible for all external interests. Gibraltar is also excluded from the customs union and the common agricultural policy.
For the first time, however - and before the EU expanded to encompass 25 states - it was agreed that Gibraltar would be attached to the UK's south-west constituency in elections to the European parliament.
So in June this year, Gibraltarians voted for the first time in a pan-European election. The overall constituency result saw three Conservatives MEPs, two from the UK Independence party, one Labour and one Liberal Democrat elected.
What is happening today?
The choice of Geoff Hoon, the defence secretary, to represent the British government at today's anniversary celebrations is being seen as a snub - deliberate or unconscious - to the Spanish government. The country's new, socialist government strongly opposed the war in Iraq, unlike its predecessor, led by José María Aznar.
The high-profile representation of the British government contrasts starkly with a commemorative church service for Gibraltar in London in March, which was attended by the Conservative leader, Michael Howard, the party's former leader Margaret Thatcher and the shadow foreign secretary, Michael Ancram. Only Baroness Symons, a Labour peer, attended on behalf of the government.
Today's celebrations began with a 21-gun salute by the arriving HMS Grafton, which also angered Spaniards. This episode goes against the grain of the British and Spanish governments' relations since the election of José Luis Rodríguez Zapatero in April, when it was agreed that the issue should be left on the back burner for the time being.
Do tensions already exist?
Border delays and Madrid-imposed restrictions on telephone lines have not helped improve relations between Spain and Gibraltar. Spain claims full sovereignty over Gibraltar, home to 35,000 British citizens who vehemently oppose any change to their status. However, the British government is eager to come to an agreement with Spain, a key EU partner.
How have the citizens of Gibraltar expressed their views on sovereignty?
On Thursday November 7 2002 a referendum was held on the issue of joint sovereignty between Britain and Spain. Almost 99% of voters on the Rock gave a thumbs down to the idea.
The poll was devised by Gibraltar's government and was not legally binding on Britain. Even before it happened it was dismissed as irrelevant by the British and Spanish governments.
But there is no doubt that the vote, unofficial and pre-emptive as it was, sent a clear message to politicians about the strength of feeling in Gibraltar against losing unalloyed British sovereignty.
What precipitated the referendum?
The prime minister, Tony Blair, and Mr Aznar were keen to resolve the issue of Gibraltar. A dialogue between Spain and Britain began about 18 months prior to the vote. Then, on June 12 2002, the foreign secretary, Jack Straw, announced to the Commons that both Britain and Spain had agreed shared sovereignty was the best way forward after months of talks.
This galvanised opposition in Gibraltar. The plebiscite was called by Gibraltar's chief minister, Peter Caruana, in protest at Mr Straw's statement.
Almost the entire population of Gibraltar turned out for a mass pro-British demonstration in March, and Mr Straw was welcomed to the Rock by shouts of "traitor" and "Judas" from 2,000 protesters. The Gibraltarian government even took out a series of full-page advertisements in British newspapers pleading for support from the British public
What was the substance of the deal with Spain?
As well as agreeing to share sovereignty, Britain and Spain planned to give a much greater degree of self-government to Gibraltar. Gibraltarians were given assurances over cultural differences from Spaniards and the primacy of the English language. Mr Straw promised they would retain their British citizenship and a maximum amount of autonomy.
All powers other than foreign affairs and defence would be handed over to Gibraltar. In the words of Mr Straw's sales pitch, the Rock would enjoy "greater self-government and practical benefits of a cooperative relationship with the kingdom of Spain and its people".
Could Britain and Spain try to force a deal?
The inhabitants of the two-and-a-quarter square mile Rock fear the two governments will ignore their wishes and that they will be forced to accept some degree of Spanish rule.
The day before the referendum, Mr Blair denied that any "grubby deal" had been hatched with Spain; many Gibraltarians, however, believe the UK government secretly plans to "sell out" to Madrid.
Before the demonstrations and referendum, the UK government appeared to believe that a concerted campaign could sway Gibraltarian opinion in favour of the deal. Sweeteners included the promise of a possible £35m in EU aid to Gibraltar if it accepted a sovereignty deal.
What was the response to the referendum?
Downing Street said talks would continue with Madrid but that no solution would be imposed on Gibraltarians against their will.
Mr Blair's official spokesman said the key questions were still: "How do we ensure a more prosperous future for the people of Gibraltar? How do we resolve the real practical issues? And how do we work with the Spanish government to resolve those issues?"
Gustavo de Aristegui, Spain's then spokesman on foreign affairs, said the referendum had not been called by "competent authorities" and was "not legally binding".