Founded in 1577 by Conquistador Alberto del Canto, Saltillo is the oldest post-conquest settlement in Northern Mexico. In 1591, the Spanish resettled a community of their Tlaxcaltec allies in a separate nearby village, San Esteban de Nueva Tlaxcala. The Spanish did this in order to cultivate the land and to aid stalled colonization efforts. Saltillo grew slowly due to hostility from the indigenous Chichimeca people and water shortages, and a 100 years after its founding its population was only about 300. In comparison, the population of the adjoining Tlaxcalan town at the time, San Esteban, was about 1,750.
In the eighteenth century, Saltillo was a commercial center on the northern frontier which served as a bridge from central Mexico to regions further northeast such as Nuevo León, Nuevo Santander, Coahuila, and Texas. It also supplied the silver mines of Zacatecas with wheat. It never rose to great prominence, but did develop a commercial core and an agricultural and ranching sector that supplied its needs, with surpluses that could be sold. Saltillo became administratively important at the end of the eighteenth century, when a branch of the Royal Treasury was established in the city. Merchants, most of whom were Iberian Peninsula-born Spaniards, constituted the most important economic group, handling a wide variety of goods and selling in shops. They were the provincial branch of the transatlantic merchant sector, with ties to Mexico City merchants. Peninsular merchants in Saltillo married into the local elite society, acquired rural properties, and sought local office. In the late seventeenth century, an annual trade fair was established, which carried Mexican livestock and manufactured goods to places as far as China and Europe. Saltillo could produce wheat commercially as long as there was access to water, but as with many other parts of the North, drought was a consistent threat. In the eighteenth century, there was a demand for draft animals, which Saltillo supplied.