Spanish expeditions led by Francisco de Villagra from what today is Chile first surveyed the area in 1551 and, finding a well-established agricultural Coquimbo and Diaguita cultures, they rapidly subdued the existing peoples and expropriated the land.

The irrigation canals were accompanied by an agricultural laboratory and a panel of agronomists and, by 1900, the San Rafael area fruit orchards had attracted a sizable contingent of Italian and French immigrants.

This sudden prosperity led to San Rafael's formal designation as department seat in 1903 and, that November, the expanding railways reach the city.

The torrential Atuel and Diamante Rivers facilitated the construction of a number of important hydroelectric dams in the area, bringing further prominence to San Rafael as an economic and tourist hub within southern Mendoza Province.

The facility, which generates around 1000 MWh annually (today nearly 1% of the entire nation's),[1] also resulted in the creation of a 9000 hectare (35 mi2) reservoir, bringing with it growing recreational tourism into the area.