He was named Peruvian viceroy in late 1560 by King Philip II to replace Andrés Hurtado de Mendoza, 3rd Marquis of Cañete, who had been recalled.

In 1562, the city of Santiago del Estero (today in Tucumán province, Argentina) was founded by Francisco de Aguirre on orders of the viceroy.

López de Zúñiga favored the monasteries, ordered the construction of an aqueduct to bring potable water to Lima, and passed laws for the improvement of the government of the colony.

He was the first viceroy of Peru to introduce the pomp of a viceregal court, with much attention paid to details of etiquette, ceremony and precedence.

Shortly after the arrival of the masked men, a rope ladder was thrown down from one of these balconies, and a man wrapped in a cape began to descend.

There was a single witness to these events, a young man taking the air on the balcony of the Zárate family residence nearby.

And they discovered that the victim was in fact Viceroy López de Zúñiga y Velasco, apparently returning from a late-night tryst.

The decision was made to move the body to the viceregal palace, and to announce that the viceroy had died of a sudden attack of apoplexy.