The Watchful Peace was a relatively peaceful period during the Third Age which lasted from 2063 to 2460. Before that time, Sauron had been secretly living in the stronghold Dol Guldur in Mirkwood, and from there he had directed numerous attacks against Gondor and Arnor. In 2060, Gandalf and others of the Wise began to suspect that the evil presence in Dol Guldur was Sauron. Gandalf went to Dol Guldur to investigate in 2063 and Sauron fled into the East, around Rhûn.
During the Watchful Peace, Gondor was free from attacks by Sauron's minions so it strengthened its borders all the while keeping a watchful eye on the east, as Minas Morgul - where the Nazgûl nevertheless remained quiet - was still a threat on their flank and Mordor was still occupied by Orcs. The Dúnedain of the North also had peace for a time.
Over the course of four centuries, Gondor's defenses began to relax. The forts along the Anduin guarding Gondor's eastern front were neglected. In the west, garrisons were no longer maintained at Isengard and the Glittering Caves - two strongholds guarding the gap between the Misty Mountains and the White Mountains (Ered Nimrais) .
Sauron, however, was not idle in the east: he created a strong alliance between the various tribes of Easterlings, so that when he returned he was more powerful than before and had many Men in his service. Sauron returned to Dol Guldur in 2460 and the Watchful Peace ended. Evil creatures had already begun to trouble the north, while attacks on Gondor resumed soon afterwards. In 2475, Ithilien was invaded by Uruks from Mordor. Around 2480, Orcs and goblins repopulated Moria and other strongholds in the Misty Mountains. In 2510, Men from Rhûn called the Balchoth, successors to the Wainriders, took advantage of the lightly guarded forts along the Anduin and crossed the river en masse. Only the coming of the Éothéod led by Eorl helped Gondor defeat the Balchoth in the Battle of the Field of Celebrant.