This position provides Castro with a good access to the eastern islands of Chiloé Archipelago as well as to the open ocean through Cucao and Huillinco to the west.

In 1767, during the time of the Bourbon Reforms that sought to modernize the Spanish Empire, Chiloé was separated from the General Captaincy of Chile to which it had previously belonged and made a direct subject of the Viceroyalty of Peru.

Many buildings, including the railway station, town hall and many of the wooden palafitos houses, were destroyed or damaged by the earthquake and tsunami of 1960.

[2] As a commune, Castro is a third-level administrative division of Chile administered by a municipal council, headed by an alcalde who is directly elected every four years.

[1] Within the electoral divisions of Chile, Castro is represented in the Chamber of Deputies by Gabriel Ascencio (PDC) and Alejandro Santana (RN) as part of the 58th electoral district, together with Ancud, Quemchi, Dalcahue, Curaco de Vélez, Quinchao, Puqueldón, Chonchi, Queilén, Quellón, Chaitén, Hualaihué, Futaleufú and Palena.

The commune is represented in the Senate by Camilo Escalona Medina (PS) and Carlos Kuschel Silva (RN) as part of the 17th senatorial constituency (Los Lagos Region).

Since November 2012, domestic flights connecting the Island with the rest of the country arrive to Mocopulli Airport four times a week.