Leuven is located in Flemish Brabant 25 km (16 mi.) east of Brussels. Strategically positioned on the Dyle (Dijle) River commanding the route from the Rhineland to the sea, Leuven was founded as a trading settlement on the site of a Viking fortress. The capital of the dukes of Brabant, it grew wealthy in the cloth trade. Brussels began to emerge as a rival as early as the second quarter of the 14th century by which time its wealth equaled that of its eastern neighbor. The dukes began spending increasing amounts of time in Brussels, which, less dependent on cloth, suffered less from English competition. Economic malaise in Leuven induced hundreds of merchants and craftsmen to move to Brussels in the mid-14th century. Leuven was also plagued by persistent political turmoil as the popular classes sought a share in government. The dukes, notably John III, Joan, and Wenceslaus, stayed frequently in Brussels, whose calmer political climate induced the gradual relocation of the ruling court and household there. By the end of the ducal wars of succession and the onset of the Burgundian regime in the early 15th century, Brussels had supplanted Leuven as the de facto capital, a status made official in 1531.
In 1425, the Université catholique de Louvain was founded after officials in Brussels rejected locating it there, fearing an influx of student-borne licentiousness and rowdyism.
Historical Dictionary of Brussels. Paul F. State.