The city was founded by Provincial Government on 12th October 1929 in the beautiful valley formed by the rivers Simpson and Coyhaique, with mount Divisadero to the south, to support the colonists and the Sociedad Industrial de Aysén, SIA, which had its central office since 1906 up stream from Coyhaique where the Escuela Agrícola is today.
Coyhaique in aboriginal language means village or camping site between water courses.
Town hall was created in 1948, and in 1974 it was appointed capital of the XI region.
The tracing of the city is very peculiar, since its centre is a pentagon where ten main streets start to be then divided into squares.
The region was inhabitted by small aboriginal groups like Chonos and Alakalufes, who lived on hunting and fishing. Towards the end of XIX century, a shy colonization started. The richness of timber attracted several companies that abusively cut down tress, and destroyed almost 3 million hectares of forest to use the land for pastures.
The area´s environmental conditions were favorable for bovine and ovine livestock. There is a monument to the Sheperd, erected in homage to those brave bredders.