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Founding of the city

Pedro de Valdivia, a conquistador from Extremadura sent by Francisco Pizarro from Peru, arrived in the Mapocho valley on 13 December 1540, after a long journey from Cusco. Valdivia and his party camped by the river on the slopes of the Tupahue hill and gradually began interacting with the Picunche people who lived in the area. Valdivia later called a meeting with the local chiefs, during which he explained his plan to establish a city on behalf of Charles IV of Spain. The city would serve as the capital of his governorship of Nueva Extremadura.

On 12 February 1541, Valdivia officially founded the city of Santiago del Nuevo Extremo (Santiago of New Extremadura) in honor of the Apostle James, the patron saint of Spain. The city was established near Huelén, which Valdivia renamed Santa Lucía. He assigned the city's layout to master builder Pedro de Gamboa, who designed a grid plan. At its center, Gamboa placed a Plaza Mayor, which became the town's central hub. Surrounding the plaza, plots were designated for the cathedral, the jail, and the governor's house. The city was divided into eight blocks from north to south and ten blocks from east to west, between the Mapocho River and the Cañada with each quarter-block, or solar, granted to settlers. The colonial architecture following the grid plan consisted of one or two-story houses, adobe walls, tile roofs, and rooms around interior corridors and patios.

Valdivia left for the south with his troops months later, initiating the Arauco War. Santiago was left vulnerable, and a coalition of Mapuche and Picunche tribes led by chief Michimalonco destroyed the city on 11 September 1541, despite the efforts of a Spanish garrison of 55 soldiers defending the fort. The defense was led by Spanish conquistadora Inés de Suárez. When she realized they were being overpowered, she ordered the execution of all indigenous prisoners, displaying their heads on pikes and throwing some towards the attackers. In response to this brutal act, the indigenous forces dispersed in fear. The city was gradually rebuilt, with the newly established city of Concepción gaining political prominence as the Royal Audiencia of Chile was established there in 1565. However, the ongoing threat of the Arauco War and frequent earthquakes delayed the establishment of the Royal Court in Santiago until 1607, which solidified the city's status as the capital.

During the early years of the city, the Spanish suffered from severe shortages of food and other supplies. The Picunches had adopted a strategy of halting cultivation and retreating to more remote locations, which isolated the Spanish and forced them to resort to eating whatever they could find. The shortage of clothing meant that some Spanish had to dress with hides from dogs, cats, sea lions, and foxes.