There is a common misconception thatthe discovery of the Cape of Good Hope by the Portuguese led to the collapse of the Arab and Egyptian economies during the Ottoman era, and to the downfall of the Karimi caste of Muslim merchants who dominated the spice trade along the Red Sea beginning in the Mameluke and Ayyubid periods. This study challenges these misconceptions, demonstrating how these merchants maintained their supremacy in this profitable trade thanks to the relatively short distance between India and Europe via the Red Sea, as well as the Ottoman presence there which allowed the Egyptians access to ship-building wood. The Ottoman abolishment of monopolies allowed for traders to trade freely, away from state interference, enabling Egyptians to build a strong shipping fleet in the Red Sea and to regain a large part of the African gold dust market, which was necessary for buying spices from India. Portugal's ability to control the entrance to the Red Sea had also suffered a setback after the year 1572 (980 H) when Spain overtook Portugal. All these factors contributed to the spice trade continuing to reach Europe through the Red Sea and to the reemergence of the Karimi traders in official documents and sources highlighting their prominent role in the Egyptian economy during that period. What did eventually lead to the downfall of the Karimi merchants was a major shift in the global trade market occurring c. 1630 (1040 H), when Yemeni Coffee replaced spices as the most important product shipped through the Red Sea, and dyed cotton cloth replaced spices as the most traded item from India.