On 10 March 1913, Peñarol was declared a "pueblo" (village) by the Act of Ley Nº 4.311.

[1] On 1 July 1953, its status was elevated to "villa" (town) by the Act of Ley Nº 11.967.

When Montevideo was a colonial walled city and the area of Peñarol had no name and was all farms field, Giovanni Battista Crosa an oriundo from Pinerolo (Piedmont, Italy), set up a grocery store in 1776, where today is the intersection of Coronel Raíz and Route 102 (perimeter), in the currently piped nascent Miguelete stream.

Crosa nicknamed the district with the name of his hometown, Pinerolo, whose name is Pinareul in Piedmontese (or Pignerol in French) and was corrupted in popular speech as Peñarol.

Its focus has always been on football, a sport in which the club excels,[4] having never been relegated from the top division.