[1] Modern Colonia del Sacramento produces textiles and has a free trade zone, in addition to a polytechnic centre and various government buildings.

Manuel Lobo with 5 ships containing about 400 soldiers, craftsmen, carpenters and stonecutters, and 18 guns, reached San Gabriel Island on 20 January 1680.

Garro sent a force of 3,400 men under the command of Antonio de Vera Mujica, capturing the besieged town on the night of 6–7 August 1680.

Lencastre ordered the building of houses of stone and mud with tile roofs, the enlargement of the city walls, and the addition of a fortified tower.

The colonists grew wheat, hemp flax, and grape vines, and exported cattle hides to Rio de Janeiro, while importing wood and foodstuffs.

[2]: 113–115, 121–127, 131 As a consequence of the War of the Spanish Succession, the governor of Buenos Aires, Valdes Incian, initiated the Siege of Colonia del Sacramento.

The forces of the Spanish governor were commanded by Baltazar García Ros from 18 October 1704 until 14 March 1705, when the colonists were evacuated by Portuguese ships.

Spain returned the colony in the 1762 Treaty of Fontainebleau, and Dom José Pedro de Figueiredo Sarmento took over as governor on 27 December 1763.

On 10 January 1809, before the independence of Uruguay, it was designated as a "Vila" ("town" in 19th century Portuguese) and has since been elevated to the status of "Ciudad" ("city" in Spanish).

Since independence, Colonia del Sacramento has expanded to the north and east, but the original Bairro Histórico (historic quarter in Portuguese or Barrio Histórico, current Spanish spelling) retains its irregular, terrain-fitting street plan built by the Portuguese, contrasting with the wider, orthogonal calles in the newer Spanish area.

With an initial investment of more than US$100 million, it was planned to build a sustainable city open to the community as a hub for the knowledge economy industry on a 500-hectare site, which includes forests and seven kilometers of coastline, with beaches such as Calabrés and Fernando.

[citation needed] Outside the wall, the historical part of the city was planned in the Spanish colonial style and in the characteristic checkerboard layout.

The Barrio Histórico (historic quarter) section of Colonia del Sacramento is designated a World Heritage Site by UNESCO.

The city is served by Laguna de los Patos International Airport located 6 kilometres (4 mi) from Colonia along Route 1.