Its territory is surrounded by the Italian capital city Rome, and priests and nuns of many nationalities make up almost all of the population.
The Vatican City is a tiny fragment when compared with the extensive Papal States of central Italy, which were conquered by the forces of Italian unification in the mid-19th century. The popes then became "prisoners in the Vatican", unwilling to leave the confines of the Apostolic Palace until 1929, when Italy's Fascist government negotiated the Lateran Treaty that created the current mini-state.
The Vatican City itself packs many imposing buildings into its small area. These include St Peter's Basilica, a pilgrimage site. The Vatican Museums and Art Galleries house the priceless art collections of the popes.
On a more profane level, the Vatican has moved to meet international demands for more financial transparency following an investigation in 2010 into the Vatican Bank over violations of money-laundering rules.
Population about 800
Area 0.44 sq km (0.17 sq mile)
Major languages Latin (official), Italian
Major religion Christianity
Life expectancy 74 years (men), 81 years (women)
Currency  euro
Head of state: Pope Francis
Cardinals elected the first Latin American pope in March 2013, choosing Cardinal Archbishop Jorge Mario Bergoglio of Buenos Aires to succeed Pope Benedict XVI, who had resigned over ill-health after a reign of eight years.
At 76 he was only two years younger than Benedict at the time of his election, confounding expectations that the cardinals would opt for a younger candidate to lead the Catholic Church through the many challenges it faces.
Moreover, he has only one lung, which raised doubts about his stamina in this demanding post.
He had broad appeal in the College of Cardinals, being conservative on homosexuality but liberal on such social issues as poverty and inequality.
Powerful transmitters beam Vatican Radio - "The Pope's Voice" - to a global audience.
But the station has faced allegations that its transmissions have been putting lives at risk in a Rome suburb by exceeding Italy's electromagnetic radiation standards - claims the Vatican denies.
The papacy maintains a Twitter account, @pontifex.
The Vatican is the smallest independent state in the world and residence of the spiritual leadership of the Roman Catholic Church.