Columbus reached Nicaragua in 1502 on his last voyage. In 1522 Gil González Dávila, a Spanish explorer, led an expedition into Nicaragua. He met Nicarao, an Indian chief living near Lake Nicaragua, and persuaded him and his people to accept Christianity. In 1524 Francisco Hernández de Córdoba founded the settlements of Granada and León. Little gold was found, and consequently growth was slow. Nicaragua became part of the captaincy general of Guatemala. There was a local governor in León.

During the 17th century French, English, and Dutch buccaneers made many raids in Nicaragua. The English settled in Bluefields and elsewhere, built plantations, and brought in African slaves to work them. England established a protectorate over the Mosquito Coast—which included part of Honduras as well as eastern Nicaragua—in 1687. The protectorate, administered as part of Jamaica, lasted for 200 years.