It was established as California's 81st AVA by the Bureau of Alcohol, Tobacco and Firearms (ATF) on April 19, 1999 after the ATF received the petition from Mr. Volker Eisele, owner of the Volker Eisele Vineyard and Winery proposing a new viticultural area in Napa County to be known as "Chiles Valley District".
The appellation has a cooler climate than the main Napa Valley floor due to elevations of 600–1,200 feet (183–366 m) as well as a cooling breeze from the Pacific Ocean.
This fairly constant northwesterly flow produces substantial cooling during the day and, in combination with the altitude, relatively dry air.
The relative distance from San Pablo Bay and the Pacific Ocean allows the summer fog to move in much later than in the main Napa Valley.
Late fog ceiling, combined with low minimums, cause a very slow heat buildup during the day, again producing relatively cooler average temperatures than those found in many places of the Napa Valley.
In addition, the lack of fog allows a much faster temperature build up during the day, reaching the daily high two to three hours earlier than on the valley floor.
Not only is the temperature drop at nightfall less, but also much more gradual so that during a 24 hour period the heat summation is substantially higher on the slopes than within the AVA boundaries.
A combination of a lower elevation valley floor and substantially higher mountains on the western side causes the formation of inversion layers, which result in substantially higher average temperatures during the growing season and significantly lower ones in the winter.
The overall terrain gently slopes toward a series of creeks, which act as natural drainage for surface as well as subterranean water.
[11] As a general rule, the soils in the Chiles Valley all belong to the Tehama Series: nearly level to gently slopping, well drained Silt loams on flood plains and alluvial fans.
The elevated vineyards are made mostly of decomposed chert, a rocky red volcanic soil, and green serpentine.
Its distance from the rest of the Napa Valley essentially excluded it from the late 19th century wine business boom cycle.
The region was too small and remote to be a significant contributor to the mass-produced fortified and popular jug wines marketed for decades following Prohibition.
In addition, on the legendary Rancho Catacula parcel, the Volker Eisele Family began cultivating Cabernet Sauvignon in 1975.