Pichilemu was founded by the inheritors of Lauriano Gaete and Ninfa Vargas in late 1891, and was established as an "autonomous commune" on December 22, 1891, by decree of President Jorge Montt and Interior Minister Manuel José Irarrázabal. The Pichilemu area was first populated by the indigenous Promaucaes. It was conceived as a beach resort for upper-class Chileans by Agustín Ross Edwards, a Chilean politician and member of the Ross Edwards family. Pichilemu is home to five historic monuments of Chile: the Agustín Ross Cultural Centre and Park, the Estación Pichilemu railway station, El Árbol tunnel, and the Caballo de Agua. Additionally, part of the city was declared a Zona Típica ("Traditional Area" or "Heritage Site") by the National Monuments Council, in 2004.
The city is part of District No. 35 and is in the ninth senatorial constituency of O'Higgins Region electoral division. Pichilemu is home to the main beach in O'Higgins Region, and is a tourist destination for surfing, windsurfing and fun boarding.
Tourism is the main industry of the city, but forestry and handicrafts are also important. Pichilemu has many expansive dark sand beaches. Several surf championships take place in the city each year at Punta de Lobos, which according to Fodor's is "widely considered the best surfing in South America year-round