In 1532, Francisco Pizarro arrived to northern Peru and founded the first Spanish city , San Miguel de Piura. Later on he moved south and fought, captured and executed Atahualpa in Cajamarca. The crumbling of the Tawantinsuyo had already started. In 1535, Pizarro founded Lima, as the capital of Peru and called it "The city of Kings".

Ten years later the Viceroyalty of Peru was established with jurisdiction over most of South America. For the following almost three centuries, the system had a Major Government - the Viceroy, the Corregidores (administrators), the Audiencia (High Court) and the minor Government (Indian rulers in charge of groups of natives). The colonial society was highly racist and hierarchical.

Peru was allowed to trade only with the "mother country", Spain sending there huge amounts of precious metals, mainly gold and silver; mining was done exclusively by natives. All commerce was centralized through Lima, the capital city. The agriculture also suffered with the substitution of crops, and introduction of new European products.

The Indians rose in the second half of the eighteen century, led by Tupac Amaru II, a native noble from the Cusco region.

In the early 19th century, the Spanish colonies were under a severe crisis. Jose de San Martin commanding the Argentine troops landed in the Paracas Bay, Southern Peru in November 1820. Then he marched north and on July 28th 1821, San Martin proclaimed the independence of Peru in Lima. Bolivar had already gained independence of Venezuela and Colombia and Antonio Jose de Sucre was sent to Ecuador obtaining victory at the Pichincha battle on May 24th 1822. The independence of Peru and South America was consolidated by the battles of Junin (August 1824) and Ayacucho (December 1824) where Bolivar and Sucre defeated the Spanish Troops.

In 1879, Peru and Bolivia went through a major war with Chile. Bolivia lost her coastal province and Peru lost its southern territory (Tarapacá and Arica). In 1929 an agreement was signed between Peru and Chile, under which Tacna returned to Peru.

The Peruvian political and economical management of the country after independence was dominated by the traditional elite, landowner class involved in agricultural exports. In the 20th century, Peruvian politics started to change when the low and middle classes took part of the political life and the country went through a series of military coups and dictatorial Governments, leading to the economic crisis and the burden of a large foreign debt prevalent in recent years.