Ethnically, culturally, and socially, Paraguay has one of the most homogeneous populations in Latin America. About 95% of the people are mestizos of mixed Spanish and Guaraní Indian descent. The only trace of the original Guaraní culture is the Guaraní language, spoken by 90% of the population. About 75% of all Paraguayans can speak Spanish. Guaraní and Spanish are both official languages. Germans, Japanese, Koreans, ethnic Chinese, Arabs, Brazilians, and Argentines are among those who have settled in Paraguay and they have to an extent retained their respective languages.

Paraguay's population is distributed unevenly throughout the country. The vast majority of the people live in the eastern region near the capital and largest city, Asuncion. The Chaco, which accounts for about 60% of the territory, is home to less than 2% of the population. The country is predominantly Roman Catholic, with some Mennonite and other Protestant minorities.