Archaeological research has indicated the site of Arica was inhabited by different native groups for at least ten thousand years. The city was founded by Spanish captain Lucas Martinez de Begazo in 1541, and in 1570 was entitled as "La Muy Ilustre y Real Ciudad San Marcos de Arica" (the very illustrious and royal city of San Marcos of Arica). This city was, from 1545, the port for exporting the silver of Potosí, Bolivia.
The Potosi silver mine was the largest such mine in world history, making Arica a crucial port for the Spanish Empire. This port was looted by such famous pirates, buccaneers, and privateers as Francis Drake, Thomas Cavendish, Richard Hawkins, Joris van Spilbergen, John Watling, Simon de Cordes, Leandro de Valencia, Bartholomew Sharp, William Dampier, and John Clipperton.
Arica was occupied by Bolivia, once from 1836–1839, then again from 1841-1842 after the Battle of Ingavi.
In 1855, the Peruvian government inaugurated the Arica-Tacna railroad (53 km long), one of the first in Latin America. The rail line still functions.
The 1868 earthquake devastated the city.
The earthquake of August 13, 1868 struck near the city with an estimated magnitude of 8.0 to 9.0, killing an estimated 25,000 to 70,000 people. Others estimate that the population of Arica was less than 3,000 people and the death toll was around 300. It produced a tsunami recorded in Hawaii, Japan and New Zealand. Arica lies very close to the subduction zone known as the Peru-Chile Trench where the Nazca plate dives beneath the South American plate, threatening the city with mega thrust earthquakes.
In 1958, the Chilean Government established the "Junta de Adelanto de Arica" (Board of Development for Arica), which promulgated many tax incentives for the establishment of industries, such as vehicle assembly plants, a tax-free zone, and a casino, among others. Many car manufacturers opened plants in Arica, such as Citroen,