By the end of the 7th century BC Sparta had become the most powerful city-state in the Peloponnese and was the political and military hegemon over Argos, the next most powerful city-state. Sparta acquired two powerful allies, Corinth and Elis (also city-states), by ridding Corinth of tyranny, and helping Elis secure control of the Olympic Games. Sparta continued to aggressively use a combination of foreign policy and military intervention to gain other allies. Sparta defeated Tegea in a frontier war and offered them a permanent defensive alliance; this was the turning point for Spartan foreign policy. Many other states in the central and provincial northern Peloponnese joined the league, which eventually included all Peloponnesian states except Argos and Achaea.
The league was organized with Sparta as the hegemon, and was controlled by the council of allies which was composed of two bodies: the assembly of Spartiates and the Congress of Allies. Each allied state had one vote in the Congress, regardless of that state's size or geopolitical power. No tribute was paid except in times of war, when one third of the military of a state could be requested. Only Sparta could call a Congress of the League. All alliances were made with Sparta only, so if they so wished, member states had to form separate alliances with each other. And although each state had one vote, League resolutions were not binding on Sparta. Thus, the Peloponnesian League was not an "alliance" in the strictest sense of the word (nor was it wholly Peloponnesian for the entirety of its existence).
The league provided protection and security to its members. It was a conservative alliance which supported Oligarchies and opposed tyrannies and democracies.
Later history of the League
After the Persian Wars the League was expanded into the Hellenic League and included Athens and other states. The Hellenic League was led by Pausanias and, after he was recalled, by Cimon of Athens. Sparta withdrew from the Hellenic League, reforming the Peloponnesian League with its original allies. The Hellenic League then turned into the Athenian-led Delian League. This might have been caused by Sparta and its allies' unease over Athenian efforts to increase their power. The two Leagues eventually came into conflict with each other in the Peloponnesian War. Under Spartan leadership, the League defeated Athens and its allies in 404 BC.
Following the disastrous Spartan defeat by Thebes at the Battle of Leuktra in 371 BC, Elis and the Arcadian states seized the opportunity to throw off the yoke of Spartan hegemony; the Arcadians formed themselves into their own league to preserve their independence. The size of the Peloponnesian League was then further reduced by the Theban liberation of Messenia from Spartan control in 369 BC. The states of the north-eastern Peloponnese, including Corinth, Sicyon and Epidauros, adhered to their Spartan allegiance, but as the war continued in the 360s BC, many joined the Thebans or took a neutral position, though Elis and some of the Arcadian states realigned themselves with Sparta. In 338 BC, the Peloponnesian League was disbanded when Philip II of Macedon, father of Alexander the Great, formed the League of Corinth after defeating Thebes and Athens, incorporating all the Peloponnesian states except Sparta.