Sheep farming, as many other places in Patagonia, was the main impetus for population settlements beginning in the late 19th century.
Abundant rivers, the seacoast, and good pastures were some of the reasons that fueled population growth. Río Grande was founded on July 11, 1921, when the central government issued a decree recognizing this locality as the "Agricultural Colony of Río Grande".
In the beginning, the land was subdivided among a few families, owning large estates until the agrarian reform of 1925. Cattle raising became one of the most important economic activities in the area.
To promote industrial development, Tierra del Fuego is excluded from VAT and federal income tax. As a result, several manufacturing companies, particularly those involving electronic products, have opened factories in this city. One of the most rapidly-growing sectors is the production of laptops and net books. Imported in their entirety until 2006, 42% of the Argentine market for these goods in 2010 was supplied by firms established in Río Grande and Vicente López, and portfolio investments announced in 2011 envisage the production of 6.9 million units in Tierra del Fuego Province, principally in Río Grande.
The city's population has grown rapidly since 1980, as many people have relocated from the northern parts of Argentina and from other countries, such as Bolivia, to work in factories that offer higher wages than other parts of Argentina
