How and when was Portugal created?

By the way, the current Galician language in Spain is just the same language Portuguese is with the difference that it has been kept under the massive influence of the Castilian (Spanish) for over 500 years. The result of a language no one wants to speak because is not financially profitable is the current Galician language. In reality, if Galicians had been able to keep and use their own language with pride, they'd have been speaking what is now-a-days known as Portuguese.

The Roman province of Gallaecia became after the Kingdom of Galiza which went from Ferrol to Oporto. Its language was Galician and the Galician kingdom was covered what today are the Spanish region of Galicia and the North of Portugal (from Douro River North). When the Castillians conquered Galiza and seized Santiago the Compostela (the capital), the Galician nobles ran away to the South of their Galician Kingdom and created the new Portus Calle (Portugal) kingdom, and fought for their independence from the Castilian (Spain) crown. Soon after, the new kingdom splitted from Galiza, was renamed Portugal and the Galician language spoken there was renamed Portuguese to give it a "national" feeling. North of Minho river it remained Spain whereas South it became Portugal.

The Castillians also renamed Castillian into Spanish to give it the same "national" feeling as well as they renamed their kingdom Spain (meaning Hispania or Iberia as they had always pretended to dominate the whole Iberian peninsula).

As for how, the short answer is Alfonso the First committed treason successfully, much like the founding Fathers of the USA committed treason successfully and the leaders of the Confederacy committed treason unsuccessfully.

As mentioned in the comments, the Wikipedia entry on this subject does not adequately describe the situation and causes of the foundation of Portugal.

The creation of Portugal was nothing short of a miracle which was accomplished by a single man, Alfonso Henrique (1109-1185), known as Alfonso Henry in English. His deeds are best known from the massive tomes of the De Antiquitatibus Lusitaniae of Andre de Resende.

Prior to the time in question, almost all of Spain including what is now Portugal, belonged to Moslems from northwest Africa. Arabs, carrying with them the religion of Mohammed, invaded Africa and united with the Berbers there under this creed, creating a terrifying and determined force which had conquered Spain. This domination was not shaken until about 1070 when Rodrigo Díaz de Vivar known as "El Cid" began defeating the Moslems using combined Christian/Islamic armies. This was the pivotal point in the recapture of Spain from the Moslems, known as the Reconquista.

In the wake of El Cid's successes, King Alfonso VI of Leon capitalized on the situation and began conquering Spain. Alfonso was descended from ancient Visigothic invaders of Spain who had long resisted the Moslems from mountainous hideouts. Alfonso VI had won battles in western Spain all the way to Lisbon, but the territory, at his death, was still contested heavily. He chose a foreigner, a Norman knight, Henry son of Robert of Burgundy, to try to fight for this territory. To seal the deal, he married Henry to his bastard daughter, Theresa.

Following the death of Alfonso VI the Christian princes of Spain fell into intrigues and civil wars, during the course of which Henry died. The throne of Leon eventually fell to 18-year-old Alfonso Raymond, the son of another Norman knight and Urraca, one of the legitimate daughters of Alfonso VI. Theresa eventually accepted Alfonso Raymond, and to all appearances it seemed her territory would be added to the Kingdom of Leon, but this is not what happened.

Unexpectedly, abandoning and defying his mother, Alfonso Henry, at age 14, the ur-cousin of Alfonso Raymond, and sole son of Theresa began to fight. Theresa was assigned an army and went south to chastise her uppity son, but was met with a suprise. Alfonso gathered to himself all the local men and knights of their small realm and met her forces in battle at the field of Saint Mamede (1128) where he totally defeated them at age 18, despite being heavily outnumbered. Immediately after the battle he chased after the Galician camp, overtook it, seized his mother and threw her in a dungeon.

War then simmered for several years between the two cousins, both of them also fighting the Moslems. Henry built a castle at Celmes, but Raymond captured it and many of Henry's knights with it. Around the same time Alfonso of Aragon (yes, everybody was named Alfonso), Raymond's greatest rival, was killed by the Moors. In 1135, Raymond was declared emperor. It appeared the short rebellion was over and Henry would have to give up.

Nevertheless, Henry would not yield. While Raymond was busy with other wars, Henry kept fighting. At this juncture, the Moors decided to make one, last, great stand against the Christians, and they would begin by obliterating the upstart prince Henry. Gathering a huge force, the Saracens advanced on the small boundaries of Henry's duchy and the battle was fought in 1139 at Ourique. Defying all the odds, Henry crushed the Moorish forces commanded by five separate kings, all of whom he defeated. After this huge victory the knights of the realm declared Alfonso Henry KING OF PORTUGAL for the first time.

Now, Alfonso Raymund saw that his upstart cousin was truly a threat. Only a few years previously it seemed Henry would be just a distant memory, now all of Christendom was calling him a king. Raymund decided to make one last test of the nascent kingdom. He assembled a huge army and marched to Portugal, but rather than slaughter each other, they decided it would be a contest between knights. All the hundreds of knights of both sides lined up and fought one against the other in single combat to determine the winner. By the end of the bloody tournament, the Castilians decided the Portuguese had fought worthily and Raymund conceded. The result was formalized two years later by the Treaty of Zamora (1143). Portugal was born.