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A tulip, known as "the Viceroy", displayed in a 1637 Dutch catalog. Its bulb cost between 3000 and 4200 florins depending on size. A skilled craftsman at the time earned about 300 florins a year.

Tulip mania or tulipomania (Dutch names include: tulpenmanie, tulpomanie, tulpenwoede, tulpengekte and bollengekte) was a period in the Dutch Golden Age during which contract prices for bulbs of the recently introduced tulip reached extraordinarily high levels and then suddenly collapsed. At the peak of tulip mania in February 1637, tulip contracts sold for more than 10 times the annual income of a skilled craftsman. It is generally considered the first recorded speculative bubble (or economic bubble). The term "tulip mania" is now often used metaphorically to refer to any large economic bubble (when asset prices deviate from intrinsic values).

The event was popularized in 1841 by the book Extraordinary Popular Delusions and the Madness of Crowds, written by British journalist Charles Mackay. According to Mackay, at one point 12 acres (5 ha) of land were offered for a Semper Augustus bulb. Mackay claims that many such investors were ruined by the fall in prices, and Dutch commerce suffered a severe shock. Although Mackay's book is a classic that is widely reprinted today, his account is contested. Many modern scholars believe that the mania was not as extraordinary as Mackay described, with some arguing that the price changes may not have constituted a bubble.

Research on the tulip mania is difficult because of the limited data from the 1630s—much of which comes from biased and anti-speculative sources. Although these explanations are not generally accepted, some modern economists have proposed rational explanations, rather than a speculative mania, for the rise and fall in prices. For example, other flowers, such as the hyacinth, also had high prices on the flower's introduction, which then fell dramatically. The high prices may also have been driven by expectations of a parliamentary decree that contracts could be voided for a small cost—thus lowering the risk to buyers.

The tulip was introduced to Europe in the mid-16th century from the Ottoman Empire, and became very popular in the United Provinces (now the Netherlands).Tulip cultivation in the United Provinces is generally thought to have started in earnest around 1593 after the Flemish botanist Charles de l'Écluse had taken up a post at the University of Leiden and established the hortus academicus. There, he planted his collection of tulip bulbs—sent to him from Turkey by the Emperor's (Ferdinand I, Holy Roman Emperor) ambassador to the Sultan, Ogier de Busbecq—which were able to tolerate the harsher conditions of the Low Countries, and it was shortly thereafter they began to grow in popularity.

The flower rapidly became a coveted luxury item and a status symbol, and a profusion of varieties followed. They were classified in groups; one-coloured tulips of red, yellow, or white were known as Couleren, but it was the multicoloured Rosen (red or pink on white background), Violetten (purple or lilac on white background), and, to a lesser extent, the Bizarden (red, brown or purple on yellow background) that were the most popular. These spectacular and highly sought-after tulip bulbs would grow flowers with vivid colors, lines, and flames on the petals, as a result, it is now understood, of being infected with a tulip-specific virus known as the "Tulip breaking virus", a type of mosaic virus.

Still-Life of Flowers by Ambrosius Bosschaert (1573–1621) of the Dutch Golden Age

Growers named their new varieties with exalted titles. Many early forms were prefixed Admirael ("admiral"), often combined with the growers' names—Admirael van der Eijck was perhaps the most highly regarded of about fifty so named. Generael ("general") was another prefix that found its way into the names of around thirty varieties. Later came varieties with even more superb names, derived from Alexander the Great or Scipio, or even "Admiral of Admirals" and "General of Generals". However, naming could be haphazard and varieties highly variable in quality. Most of these varieties have now died out, though similar "broken" tulips continue in the trade.

Tulips grow from bulbs, and can be propagated through both seeds and buds. Seeds from a tulip will form a flowering bulb after 7–12 years. When a bulb grows into the flower, the original bulb will disappear, but a clone bulb forms in its place, as do several buds. Properly cultivated, these buds will become bulbs of their own. The mosaic virus spreads only through buds, not seeds, and so cultivating the most appealing varieties takes years. Propagation is greatly slowed down by the virus. Tulips bloom in April and May for only about a week, and the secondary buds appear shortly thereafter. Bulbs can be uprooted and moved about from June to September, and thus actual purchases (in the spot market) occurred during these months.

During the rest of the year, traders signed contracts before a Notary to purchase tulips at the end of the season (effectively futures contracts). Thus the Dutch, who developed many of the techniques of modern finance, created a market for durable tulip bulbs. Short selling was banned by an edict of 1610, which was reiterated or strengthened in 1621 and 1630, and again in 1636. Short sellers were not prosecuted under these edicts, but their contracts were deemed unenforceable.

A standardized price index for tulip bulb contracts, created by Earl Thompson. Thompson had no price data between February 9 and May 1, thus the shape of the decline is unknown. Though prices are unknown, the tulip market is known, however, to have collapsed abruptly in February.

As the flowers grew in popularity, professional growers paid higher and higher prices for bulbs with the virus. By 1634, in part as a result of demand from the French, speculators began to enter the market. In 1636, the Dutch created a type of formal futures markets where contracts to buy bulbs at the end of the season were bought and sold. Traders met in "colleges" at taverns and buyers were required to pay a 2.5% "wine money" fee, up to a maximum of three florins, per trade. Neither party paid an initial margin nor a mark-to-market margin, and all contracts were with the individual counterparties rather than with the exchange. No deliveries were ever made to fulfill these contracts because of the market collapse in February 1637. This trade was centered in Haarlem during the height of a bubonic plague epidemic, which may have contributed to a culture of fatalistic risk taking.

The contract price of rare bulbs continued to rise throughout 1636. That November, the contract price of common bulbs without the valuable mosaic virus also began to rise in value. The Dutch derogatorily described tulip contract trading as windhandel (literally "wind trade"), because no bulbs were actually changing hands. However in February 1637, tulip bulb contract prices collapsed abruptly and the trade of tulips ground to a halt.

The lack of consistently recorded price data from the 1630s makes the extent of the tulip mania difficult to estimate. The bulk of available data comes from anti-speculative pamphlets by "Gaergoedt and Warmondt" (GW) written just after the bubble. Economist Peter Garber collected data on the sales of 161 bulbs of 39 varieties between 1633 and 1637, with 53 being recorded by GW. Ninety-eight sales were recorded for the last date of the bubble, February 5, 1637, at wildly varying prices. The sales were made using several market mechanisms: futures trading at the colleges, spot sales by growers, notarized futures sales by growers, and estate sales. "To a great extent, the available price data are a blend of apples and oranges," according to Garber.