Caraballeda was founded as the original port for the capital, Caracas, by Captain Diego de Losada in early 1568.

The name is derived from the Carballeda Virgin, patron saint of the town of Rionegro del Puente in Zamora, Spain, which was the birthplace of Diego de Losada.

For eighteen years the city did well, and was one of the most prosperous in the colony; but in 1586 the governor of Venezuela, Don Luis de Rojas y Mendoza, a tyrant, attempted to take the power of appointing Caraballeda's officials.

[5] This occurred all along the coastal area that makes up Vargas state but was concentrated in Caraballeda.

The debris flows that had occurred in the past provided the only flat places where structures could be built.