After their presence, records indicate that in 1788, the area became part of the Real Feitoria do Linho Cânhamo, established on the banks of the Rio dos Sinos to occupy the land for the Portuguese Crown and produce hemp, a raw material for making ship rigging that Portugal exported to other countries.

When the occupation plan failed to meet expectations, the lands of the Real Feitoria were distributed to German immigrants in 1824, during the period of Imperial Brazil under Dom Pedro.

The first German immigrant to settle in Estância Velha was Mathias Franzen, who cleared the land and began farming.

Estância Velha's leather industry dates back to 1890, initially focusing on saddles and riding accessories before expanding to tanning hides and producing footwear, which became the region's main economic driver.

With both industry and agriculture thriving, Estância Velha was designated as the seat of the tenth district of São Leopoldo on 15 January 1930.