With the arrival of Spanish and other foreign settlers the land and water resources were divided up; churches, towns and villages were established; forests were felled; land was divided into plots, and irrigation channels and mills were built. Thus, one of the most prosperous times in the history of the island began, thanks to the growth of the overseas trade promoted by the location of the Court of the Indies in the capital's port in 1558: sugar trade (especially in Tazacorte and San Andrés y Sauces) and industry (silk, in particular) flourished. The capital's port at this time was the third most important in the world after Seville and Antwerp. This encouraged naval industries and of course the presence of European and Algerian pirates and privateers on her shores. In 1585 the island had 11 baptismal fonts and 5,580 inhabitants.

With the arrival of the Antiguo Regimen or Old Régime growth began to decline. Trade rights were lost and the sugar and wine crises kicked in. The budding and prosperous traders of La Palma were smothered by growing controls imposed by the monarchy, the nobles and the local oligarchy of each town: the island at this time was totally controlled by the aristocracy prevailing in Spain. A crucial event which marked the beginning of a new political era in La Palma, the Canaries and all the Spanish empire, was the fall of the perpetual governors in 1773 and the first democratic elections to vote for public representatives. At this time, La Palma was in the vanguard of the new liberal society in Spain. In 1812 the majority of the island municipalities were established and the new political administrative period began.