The vast majority of the people live in the eastern region, most within 160 kilometres (99 mi) of Asunción, the capital and largest city, which borders on Argentina to the south and west.

About 75% of the people are mestizo (mixed Spanish and Guaraní Native American descent), 20% are Whites, and the rest are small minorities of Indigenous or Afro Paraguayan origin.

Paraguay has a history of foreign settlement, especially in the 20th century: Germans (the majority are Mennonites) with long-time Paraguayan dictator Alfredo Stroessner (President, 1954–1989) himself of German ancestry; Italians (around 40% of the total Paraguayan population is of full or partial Italian descent);[5][6][7] Japanese with Okinawans; Koreans; Chinese; Arabs, Ukrainians; Poles; Southern Europeans; Jews; Brazilians; and Argentines are among those who have settled in Paraguay.

Virtually all Koreans and Chinese lived in Ciudad del Este or Asunción and played a major role in the importation and sale of electronic goods manufactured in Asia.

A group of radical socialist Australians in the 1890s voluntarily went to create a failed master-planned community, known as Nueva (New) Australia (1893 -1897); and Elisabeth Nietzsche, a German racial ideologist and sister of philosopher Friedrich Nietzsche came to Paraguay in her attempt to build a colony, Nueva Germania (Neues Deutschland) (founded 1886) devoted to a hypothetical pure white "Nordic" society.

A 2022 census found that Paraguay's population shrank as a production of migration and having smaller families, as well as better data integrity, resulting in a loss of over one million.

[22] Total Fertility Rate (Wanted Fertility Rate):[1] The Paraguay's predominant ancestry is European, which represents a large part of the population, mainly descendants of Spaniards and Italians (who have contributed to repopulating the country after the Triple Alliance War) but there are also a large number of people of German ancestry, due to the German Mennonites (majority in the western part of the territory).