The Act's signing grew from the discontent among European Community members in the 1980s about the de facto lack of free trade among them. Leaders from business and politics wanted to harmonise laws among countries and resolve policy discrepancies. A committee to analyse whether a common market was possible and what steps would be needed drew up proposals that became the Single European Act.

It was signed on the basis of a political agreement reached at the European Council held in Luxembourg on 3 December 1985.

A core element of the SEA was to create a Single Market within the EU by 1992, a date by which, it was hoped, the legislative reforms seen necessary would have been completed. In order to make this objective possible the SEA reformed the legislative process by introducing the Cooperation procedure and by extending Qualified Majority Voting to new areas. Measures were taken to shorten the legislative process. The SEA intended to remove barriers and to increase harmonisation and competitiveness among its countries.

The SEA was subject to two referenda. One in Denmark after the Danish parliament rejected the draft treaty, and one in Ireland after the Irish Supreme Court ruled - in Crotty v. An Taoiseach - that the Irish Constitution would have to be amended before the state could ratify the treaty.