On 27th February 1883, a party of the army that occupied Araucanía and had quartered in Villarrica advanced up to Pucón, and installed headquarters on the eastern side of the present square, a place cleared to beused as a training field, being its strategic aim to control the pass through the Andes and exercise sovereignty in the area.
This military outpost was the origin of Pucón. Soon arrived some leather and timber German merchants like Hike, Martín, and Holzapfel. Towards 1889 came Ansorena, Quezada and Matus.
In 1904, the Chilean government granted the territory north of lake Villarrica and its extension to the north of river Toltén to a society of businessmen from Santiago, which brought some 20 German immigrant families, who settled in Llafenco, north of river Trancura.
The Mapuche population was submitted to "reduction" and concentrated upstream in Quelque, Palguín Bajo and Curarrehue.
The main activity was timber and cattle commerce, shipped on the port in La Poza. There were the courts for timber heaps, the stores, and since 1923, the first hotel, the Gudenschwager. But the big touristic impulse came with the opening of Gran Hotel Pucón, a luxurious resort with a park and golf courts. Passengers arrived to Villarrica by train, crossed the lake by boat, and disembarked in the dock opposite the hotel.
In 1940, the coast road between Villarrica and Pucón was built. Two other small hotels and guest houses were built and managed by German families, frequented by the artists of the recently formed Teatro Experimental and Ballet Nacional de Chile.
Anglers have frequented the place since 1930, and Pucón was the centre of sportive fishing in Chile. In 1945 opened Hotel Antumalal, which received foreign anglers. Moreover, artists and intelectuals gave an exclusive touch to the beach resort.
Between 1967 and 1969, the route between Freire and Villarrica was paved, as well as the coast route to Pucón. In the 70s, the routes to lake Caburgua, Huife, Curarrehue, Puesco, and Lican Ray were traced. This was the beginning of massive tourism that lead to the present boom. Nowadays there are new hotels, camping sites, condominiums, restaurants, cafes, dancing halls, casino, organized tours, and a ski resort in the volcano.