Alarmed by the growing power and ambitions of Napoleon, Austria, Russia, Prussia, England and Sweden formed another coalition against Napoleon to keep him under check. However, Napoleon succeeded in inflicting a crushing defeat on the Austrians as well as the Russians. This gave a serious setback to the coalition and Austria was forced to sign the humiliating Peace of Pressburg.
As a result to this treaty Austria agreed to give up Venice which was incorporated with the kingdom of Italy, and Tyrol which was incorporated with Bavaria. He raised Bavaria and Wurtemburg, which were hitherto duchies, to the position of kingdoms and increased their territories at the cost of Austria.
The outlying provinces of West Germany were given to elector of Baden. Thus he tried to greatly restrict the power of Austria. Napoleon also tried to curb the growing power of Prussia because it had threatened to intervene against Napoleon during war with Austria.
He forced Prussia to surrender Rhenish territories under the Treaty of Schonbrunn. These territories were converted into Grand Dutchy of Berg and placed under the charge of Murat. Prussia also agreed to close all her coasts to English commerce. In return for this Napoleon handed over Hanover to Germany which considerably enhanced the possibilities of conflict between Prussia and England.