In his perceptive work on the interrelationship between history and literature, Louis Montrose advocates a resituation of texts within their contexts which leads to "a reciprocal concern with the historicity of texts and the textuality of history" (20). For Montrose, aesthetic works can historicize the past and provide an understanding and explanation of times past, even though they cannot provide an objective portrayal of history (20). It is in this spirit that i would like to approach the Battle of the Sheep in Don Quijote. To resituate this well-known episode within its socio-historical context is to make possible a more profound understanding of the various contemporary economic issues that inform its plot. In the Battle of the Sheep, Don Quijote mistakes two opposing flocks of sheep for two great armies preparing for ferocious battle.Always interested in showing his heroic virtues, the knight sallies out to fight the infidel, Muslim squadron. Once recontextualized, however, the "great" battle is really indicative of socio-economic issues related to agrarian policy and reform which were chief concerns during Cervantes' lifetime.