The Myth of the Spanish Inquisition, and the Start of Modern Propaganda
It was historically believed that the Spanish Inquisition was a bloody religious persecution full of torture and genocide, but recent data shows this view is essentially a myth created by Protestants to slander Catholics.
FACT: The Myth of the Spanish Inquisition is commonly referred to as the Black Legend of the Spanish Inquisition.
The Inquisition was Real, and so was its Persecution, but the Stories of Brutality are Mostly Myths
The Inquisition was real; it was a religious judiciary body (a religious tribunal) in the Spanish state during the late 1,400’s that persecuted non-Catholics (especially Jews who were driven from Spain; see anti-Semitism in Spain).
It is true that the Inquisition could employ torture. However, it should be noted that torture and religious persecution were common at the time in Europe. There were other inquisitions, and Spain’s methods and death count were unremarkable compared to the witch burning and persecution in the rest of Europe. The Jews living in Spain, one of the most persecuted groups, were usually given a chance to convert and typically were exiled rather than tortured.
Non-Catholics, like Protestants and Jews, were brought to trial. Persecution drove them out of Spain, as they had been driven earlier from Muslim Spain in the 1,100’s. It forced them to go to other centers of Europe, where they rose up over hundreds of years and led the liberal revolutions that created the modern west. See the history of banking.
Thus, the Spanish Inquisition was a very real thing. It is a story of a dominant Catholic group trying to eliminate poor Jewish and Protestant victims. It is also a story of the first time the newly discovered [in the west] printing press was used to start a propaganda war. Printed propaganda immediately fueled the ongoing debate between Protestants and Catholics. This can be seen in Martin Luther’s 95 Theses and other texts pertaining to the debates in and around this time. See the citations and video below for more facts. 
That said, as pointed out in this article, 3,000 to 5,000 victims are 3,000 to 5,000 too many.
Timewatch – The Myth of the Spanish Inquisition (BBC 1994).
FACT: The Inquisition Myth, which Spaniards call “The Black Legend,” did not arise in 1480. It began almost 100 years later, and exactly one year after the Protestant defeat at the Battle of Muhlberg at the hands of Ferdinand’s grandson, the Holy Roman Emperor Charles V. In 1567 a fierce propaganda campaign began with the publication of a Protestant leaflet penned by a supposed Inquisition victim named Montanus. This character was a Protestant of course who painted Spaniards as barbarians who ravished women and sodomized young boys. The propagandists soon created “hooded fiends” who tortured their victims in horrible devices like the knife-filled Iron Maiden (which was never used in Spain). The BBC/A&E special plainly state a reason for the war of words; the Protestants fought with words because they could not win on the battlefield.