After the arrival of the Spanish in the area, Lieutenant General Francisco de Villagra attempted to found the City of Osorno in 1553 under the name of Santa Marina de Gaete, in honor of Governor Pedro de Valdivia's wife. That project did not become effective due to Valdivia's death.
In 1557, Governor García Hurtado de Mendoza y Martínez arrived in Chile. He founded the City and named it Villa de San Mateo de Osorno one year later as a tribute to his grandfather, the Count of Osorno. The city was destroyed by the Huilliches in 1602. A great deal of the Spanish settlers fled to Chiloé.
It was not until 1792, after signing peace with the native groups, that the remains of Osorno were found and the city was re-founded in 1796 by Ambrosio O´Higgins, who was named Marquis of Osorno as a result of that achievement.
Ever since 1798 and until 1802, Osorno was ruled by the Vice-royalty of Peru. Afterwards, it passed onto the hands of Capitanía General de Chile until 1811, when it began depending upon Peru again. In 1822, it was recovered by Chile for good.
