Asunción is one of the oldest cities in South America, being known as "Mother of Cities" because it was from here where the colonial expeditions to found other cities departed, including the second foundation of Buenos Aires and of other important cities such as Corrientes and Santa Cruz de la Sierra. The site of the city may have been first visited by Juan de Ayolas, but the town, called Nuestra Señora de la Asunción (Our Lady of the Assumption), was founded in the feast day of the Assumption August 15, 1537, by Juan de Salazar and Gonzalo de Mendoza, brother of Pedro de Mendoza. That way the city became the center of a Spanish colonial province.

In 1731 an uprising under José de Antequera y Castro was one of the first rebellions against Spanish colonial rules. The uprising failed but it was the first sign of the independent spirit that was growing among the criollos, mestizos and natives of Paraguay. It was that event indeed that influenced the independence of Paraguay, which was materialized in 1811. The secret reunions between the independence leaders to plan an ambush against the Spanish Governor in Paraguay Juan de Velasco where held at the home of Juana María de Lara, in downtown Asunción. In the night of May 14 and May 15 the rebels succeeded and were able to force the governor Velasco to surrender. Today, Lara's home is known as Casa de la Independencia (House of the Independence) and serves as a museum and historical building.

After Paraguay became independent, Asunción started to change fast. Under the presidency of Gaspar Rodríguez de Francia roads were made throughout the city and the streets were named. However, it was during the presidency of Carlos Antonio López that Asunción (and Paraguay) progressed, as the new president implemented economical measures that benefited the country. More than 400 schools, metallurgic factories and the first railroad service in South America were built during López presidency. After López died, his son Francisco Solano López became the new president and led the country to the disastrous War of the Triple Alliance that lasted for five years. After the War of the Triple Alliance (1865-70), Asunción was occupied by Brazilian troops until 1876. ^{[citation needed]}

It took several years for Asunción to recover from the war but the city saw fast development in the following years, especially in the 1970s and 1980s during Alfredo Stroessner's presidency.