Prior to the arrival of Europeans, the region around Morro Reuter was inhabited by indigenous peoples, namely the Kaingang, and possibly stray groups of Guaranis.

Over time they expanded from São Leopoldo, with the earliest settlement in Morro Reuter beginning around 1829, with the first resident, Mathias Mombach, an immigrant from Echternach, Luxembourg, having constructed his home in the neighborhood of Walachai around the same year.

They were fleeing from the economic crisis that was caused by the Napoleonic Wars, and in addition to periodic droughts and overpopulation, the Prussian government encouraged them leave.

Mathias Mombach (who was around 70), actually became an ensign in the Nation Guard in service to the Brazilian Empire under the lead of Dr. Johann (João) Daniel Hillebrand.

Mombach in his service to Morro Reuter and the neighboring German colonies is considered a legend or folk hero.