Valdivia is one of the few cities in southern Chile with a more less contineous and well documented history from its foundation in the 16th century onwards.
The site of Valdivia may have been populated since 12,000 – 11,800 B.P according to archaeological discoveries in Monte Verde (less than 200 km south of Valdivia), which would place it about a thousand years before the Clovis culture in North America. This have challenged the models of migration to the New World and it is possible that the first inhabitants of Valdivia and Chile travelled to America by watercraft and not across a land-bridge in the Bering Strait.
By the time of the arrival of the Spanish conquistadores, Valdivia was inhabited by Huilliches (Mapudungun for People of the South). Huilliches and Mapuches were both referred by the Spaniards as Araucanos. Their main language was a variant of Mapudungun, the Mapuche language.
There was a large village called Ainil in present-day downtown Valdivia, and the Valdivia River was called Ainilebu. Ainil seemed to have been an important trade center due to its ease of access to the sea and the interior using the river network of the Cruces and Calle-Calle Rivers, both tributaries of the Valdivia. Ainil may be described as "a kind of little Venice" as it had large areas of wetlands and canals, most of them drained or filled nowadays. The market in Ainil received shellfish and fish from the coast, legumes from Punucapa, and other foods from San José de la Mariquina; an agricultural zone north east of Valdivia. Remains of this ancient trade is the modern Feria Fluvial (English: Riverside Market) on the banks of Valdivia River. The surroundings of Valdivia were described as large plains having a large population that cultivated potatoes, maize, quinoa and legumes among other crops. The population have been estimated by some historians as 30-40 thousand inhabitants as of 1548 based on descriptions made by the conquistadors. Pedro Mariño de Lobera, an early conquistador and historian wrote that there were half a million Indians living within ten leagues (one league is roughly 4.2 km) from the city. Other historians consider these numbers too high and argue that early Spaniards usually exaggerated in their descriptions. Later Charles Darwin would state that "there is not much cleared land near Valdivia" which suggests that pre-Hispanic agriculture in Valdivia was far more extensive than the agriculture practiced in the early 19th century.