An early civilization was established at Tiahuanaco, on the shore of Lake Titicaca, probably by Aymará Indians; it flourished between 600 and 1000 A.D. Its influence spread throughout what is now Bolivia and southern Peru. A period of decline followed, and the region was incorporated into the neighboring Inca empire. In the 16th century it was conquered by Spaniards.

During most of the colonial period. Upper Peru (as Bolivia was then called) was part of the Viceroyalty of Peru. In 1538, the Spaniards founded what became the city of Sucre Rich deposits of silver were discovered in 1545 at Potosí. The region prospered and became a major source of wealth for Spain.

The first revolts in South America against Spanish rule began in Bolivia. Cholos rebelled at La Paz in 1661 and Indians attacked several Spanish cities in 1760–80. Several revolts followed until 1824 when Simón Bolívar sent Antonio José de Sucre and his army to free the region.

The liberated region declared its independence August 6, 1825, commemorated as a national holiday. In 1826 Bolívar drew up a constitution and the new nation based its name on his. Sucre became the first president. He was succeeded in 1828 by Andrés Santa Cruz, who governed as dictator for 10 years. Santa Cruz in 1836 proclaimed a confederation of Bolivia and Peru. Chile broke up the confederation after three years of war against it.

During the 19th and 20th centuries, Bolivia lost vast areas of land—to Chile in the War of the Pacific, 1879–83, and to Paraguay in 1938, after the Chaco War. The loss to Chile left Bolivia landlocked.

Bolivia entered World War II on the side of the Allies and was an important source of supply for tin. The nation's economy suffered heavily when prices for tin dropped sharply after the war.

As a result of the crisis, in 1952 tin mines were nationalized and land reforms begun. Discontent spread, however, especially among miners, and in response the government in the early 1960's became a virtual dictatorship. A military faction seized power in 1964 but allowed elections to be held in 1966. In 1967 Bolivian forces routed antigovernment guerrillas and killed their leader, the Cuban-trained revolutionary Che Guevara.

In 1969 peasant unrest led to the overthrow of the government by a military junta. Years of upheaval followed as leftist and right-wing factions, civilian and military, struggled for power. In the presidential election of 1980, no candidate received a majority; before congress could select a president, a military junta took over the government. In 1982 power was returned to the congress, and civilian governments have ruled since.

In 1985 the government initiated an austerity program that reduced inflation from 11,000 per cent to 20 per cent by 1988. By the 1990's, the economy had started expanding. In 1996 Bolivia signed a free trade agreement with Mercosur, a regional trading bloc.

Evo Morales, leader of the Movement Toward Socialism party, was elected president in December 2005. In 2006, after growing public pressure, Morales placed Bolivian natural gas fields under government control.