According to the 2002 census of the National Statistics Institute, Chonchi spans an area of 1,362.1 km² (526 sq mi) and has 12,572 inhabitants (6,453 men and 6,119 women). Of these, 4,588 (36.5%) lived in urban areas and 7,984 (63.5%) in rural areas. The population grew by 18.3% (1,945 persons) between the 1992 and 2002 censuses.

Originally Chonchi was a Jesuit mission station with a school which had 150 pupils in 1755, and the town itself was founded in 1767 by order of Don Guil y Gonzaga, the then Governor of Chiloé. In 1787 Chonchi had 315 inhabitants. Unification with Chile increased the economic importance of the region and promoted population growth. The 1833 census in Chonchi demonstrated that it was the most important town in south of the island. It became a parish in 1836, resuming its traditional religious significance within the area. A good anchorage made Chonchi a natural stopping place for traffic in the canals and timber exploitation transformed it into a hub for development of the region. The economic activity centred upon Chonchi reached its zenith at the beginning of the 20th century creating an opulent society with an active social circle. The influence of external ideas (Europeans) is clearly apparent in the town.

The nickname of Chonchi is Ciudad de los Tres Pisos which means "Town of three floors". The ground floor corresponds to the harbour and the marine drive with the pinturesque market Feria Artesanal, the second floor consists of the urban architecture around the museum, and the third floor is the main square with the church.

Nearby attractions include Chiloé National Park and several lakes: Lago Huillinco, Lago Tarahulín, Lago Natri and Lago Tepuhueico.

Huillinco on the lake Lago Huillinco is a village of 943 inhabitants (2002) most of whom are Huilliche with an interesting cemetery.

Cucao is one of the very few settlements on Chiloé on the west coast. It is a village with 424 inhabitants (2000) at the entrance of Chiloé National Park.

As a commune, Chonchi is a third-level administrative division of Chile administered by a municipal council, headed by an alcalde who is directly elected every four years. The 2008-2012 alcalde is Pedro Andrade Oyarzún (PDC).

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