The current laws configure the autonomous community as a federation of its present-day three constituent provinces. These western Basque districts kept governing themselves by their own laws and institutions even after the Castilian invasion in 1199–1200. The new king upheld their institutional system issued from the customary law prevalent in Basque and Pyrenean territories. This limited self-government, similar to the one for Navarre, was partially suppressed in 1839 and totally in 1876 in exchange for an agreement on tax-collection and a number of administrative prerogatives. These in turn were suspended by Franco for Gipuzkoa and Biscay, but restored by the Spanish Constitution of 1978.

The post-Franco Spanish Constitution of 1978 acknowledges historical rights and attempts a compromise in the old conflict between centralism and the different national identities (Basque, Catalan and Galician). A negotiation between UCD’s Suárez in office and PNV led to the establishment of the Basque statute, with its first article stating that the Basque people (Euskal Herria) takes on an institutional personality in the form of the Basque Autonomous Community; the 2nd article goes on to establish that it may be constituted by Álava, Biscay, Gipuzkoa, as well as Navarre. Provincial councils provided with actual relevant attributions (taxation, etc.) were restored to these provinces (called therefore diputación foral), but Navarre detached from the Basque political process. A specific approach to the national realities in Spain was eventually diffused by a legal provision allowing for the establishment of autonomous administrations and parliaments to any region in Spain (e.g. Castile and León, Catalonia, the Valencian Community, etc.), while the Basques, Catalans, and Galicians were acknowledged historic specificity.

The provinces in the Basque Country still perform tax collection in their respective territories, but with limited margin in decision making under the Spanish and European governments. Under this intricate system, the Diputaciones Forales (Basque: Foru Aldundiak) administer most of each of the provinces but are coordinated by the autonomous Basque Government (Spanish Gobierno Vasco, Basque: Eusko Jaurlaritza). The autonomous community has its own police force (the Ertzaintza), controls Education and Health Systems, and has a Basque radio/TV station. These and only some of the powers acknowledge in the Gernika Statute have since 1980 been transferred to the Autonomous Community by the Cortes Generales under the Gernika Statute. The seats of the Basque Parliament and Government are in Vitoria-Gasteiz, so this is the capital city de facto, but the Basque Autonomous Community has no capital de iure.

The Parliament is composed of 25 representatives from each of the three provinces. The Basque Parliament elects the Lehendakari (President of the Autonomous Community of the Basque Country) who forms a government following regular parliamentary procedures. Until 2020, except for the 2009-2012 period, all Lehendakaris (even those in 1937 and during the exile) have been members of the Basque Nationalist Party (Euzko Alderdi Jeltzalea) (moderate and Christian-Democrat) since 1978. Despite their continued leadership role, they have not always enjoyed majorities for their party and have needed to form coalitions with either Spain wide parties or left-leaning Basque nationalist parties, often governing in a difficult minority position. Since 1982 until the late 1990s, Basque nationalists ideologically closer to ETA refused to turn out in the Basque parliament, a significant wedge of the parliament. Currently, the Basque Government is headed by Iñigo Urkullu (PNV).