The city was founded by Pedro de Valdivia on February 9th, 1552, on its present site. The place was chosen for strategic reasons: it was near the coastal port, dominated the valleys of the Cruces and Calle Calle rivers, and had good access to the plains where La Union and Rio Bueno are located.

It was the second most important city founded by the Spanish. Abandoned and destroyed during the Mapuche uprising of 1599, it was occupied by the English pirate Sebastian de Cordes in 1600. In 1643 the same happened with Elias Erckmans who tried to establish a Dutch settlement on the Pacific.
In 1645, on the orders of the Viceroy in Peru, Valdivia was re-founded as a walled and fortified stronghold.

Towards 1770, in the face of the threat of a war with England, the defensive system, which had fallen into disrepair as a result of attempts at expansion towards the central sectors, was rebuilt.

Between 1850 and 1875 a large number of German immigrants landed at Valdivia in order to establish themselves in the cities of the south. Those who remained in the city were mainly professionals, industrialists and craftsmen who contributed to its development.

In 1954 the Universidad del Sur de Chile was opened in Valdivia. In 1960 the city was destroyed by an earthquake and tidal wave. Reborn from this disaster, the main thrust of activity has been in tourism, university life and industry.