Some key events in its downfall:

Dutch–Portuguese War: Portugal was a pioneer in the Indian Ocean due to a treaty obligation with Spain. However, in the17th centurythe Netherlands took most of Portuguese territories in Asia away. AsNatalia Nezvanovamentions below, the war came mainly because an Iberian Union with Spain that brought all of Spain's enemies to Portugal. This allowed Britain to side the Dutch in defeating the Iberian Union. That was when Indonesia and Sri Lanka shifted out of Portuguese control.

Invasion of Portugal (1807): Napoleon invaded Portugal in the 19th century and that resulted in a sequence of events that led Portugal to be temporarily ruled from Brazil [capital shifted from Lisbon to Rio]. Eventually, Brazil and Portugal parted ways in 1823.Independence of Brazil

1890 British Ultimatum: After Portugal was booted out of both Asia and America, it went to build a position in Africa in Angola and Mozambique - connecting the Atlantic and Indian Oceans termed thePink Map. However, this stood in the way of Britain's straight line of colonies from Cairo to Cape Town. Britain thus issued the ultimatum that thwarted Portugal's ambitions sparking a revolution that ended the monarchy.