In 1542, Juan Cabrillo was sent to California from the newly conquered Spanish province of Mexico to search for gold. He sailed along the coast of Alta (Upper) California and prepared the first written description of the region. Because Cabrillo's exploration party failed to find gold, the Spanish more or less ignored the region for the next two centuries. It was not until 1769 that the first permanent European settlers arrived, led by Gaspar de Portola and Father Junipero Serra. Within the next decade, missions and presidios, or military forts, were established along the coast at San Diego, Monterey, San Gabriel, and San Francisco. In 1781, the pueblo, or town, of Los Angeles was created. By the end of the century, nearly a dozen more missions had been established in California.

Most Spanish settlers established themselves on ranchos, or ranches, where they soon developed a distinct culture centered around cattle-raising. To stimulate colonization, the Spanish, and later the Mexican, government issued huge land grants. During the Spanish period these were awarded mostly to retired soldiers. A grant entitled the individual to live on and work the land, but it did not convey ownership. One soldier, Manuel Nieto, was granted 167,000 acres on which he raised cattle. Today, a small piece of this land grant is preserved and open to the public as Rancho Los Alamitos Historic Ranch and Gardens.

In 1821, after the Mexican government took control of California, the number of land grants increased as did the number of residents of non-Hispanic birth or descent. Some land grants were awarded to foreigners—mostly Americans—who were willing to become Mexican citizens. Many Californios (Spanish settlers in what is now the state of California) had little use for Mexico and engaged in sporadic revolts during the 1830s and 1840s. Then came the Mexican-American War and the 1848 Treaty of Guadalupe-Hidalgo. Under this agreement, Mexico ceded huge tracts of land in the Southwest to the United States. Called the Mexican Cession, these territories together constituted the largest single land acquisition by the United States since the Louisiana Purchase of 1803. Although the rancho system was maintained, within 20 years control of most ranchos had passed into the hands of Americans by purchase, force, or fraud.

In 1846, approximately 11,500 of California's 14,000 non-indigenous residents were of Spanish or Mexican descent. By 1850, two years after the discovery of gold in the northern part of the territory, Spanish-speaking Californians were only 15 percent of the non-Indian population; by 1870, only 4 percent. However, change came more slowly in the southern region of California. The few Americans who had settled in Southern California prior to its transfer to the United States to some extent had attempted to integrate themselves into the local culture. Frequently, they married into prominent Californio families, learned at least rudimentary Spanish, and converted to the Roman Catholic religion. Until the 1870s, Mexican Californians remained a sizable portion of the residents and voters in Southern California. Eventually, however, the press of the growing population of non-Hispanos and economic changes destroyed an old way of life.