The region of what is now Ponce belonged to the Taíno Guaynia region, which stretched along the southern coast of Puerto Rico. Agüeybaná, a cacique who led the area, was among those who greeted Spanish conquistador Juan Ponce de León when he came to the island in 1508. Archaeological findings have identified four sites within the municipality of Ponce with archaeological significance: Canas, Tibes, Caracoles, and El Bronce.

During the first years of the colonization, Spanish families started settling around the Jacaguas River, in the south of the island. For security reasons, these families moved to the banks of the Rio Portugués, then called Baramaya. Starting around 1646, the whole area from the Rio Portugués to the Bay of Guayanilla was called Ponce. In 1670, a small chapel was raised in the middle of the small settlement and dedicated in honor of Our Lady of Guadalupe. Among its earliest settlers were Juan Ponce de León y Loayza, and the Portuguese Don Pedro Rodríguez de Guzmán, from nearby San Germán.

On 17 September 1692, the King of Spain Carlos II issued a Cédula Real (Royal Permit) converting the chapel into a parish, and in so doing, officially recognizing the small settlement as a hamlet. It is believed that Juan Ponce de León y Loayza, Juan Ponce de León’s great-grandson, was instrumental in obtaining the royal permit to formalize the founding of the hamlet. Captains Enrique Salazar and Miguel del Toro were also helpful. The city is named after Juan Ponce de León y Loayza, the great-grandson of Spanish conquistador Juan Ponce de León.

In the early 18th century, Don Antonio Abad Rodriguez Berrios built a small chapel under the name of San Antonio Abad. The area would later receive the title of San Antón, a historically significant part of modern Ponce. In 1712 the village was chartered as El Poblado de Nuestra Señora de Guadalupe de Ponce (The Village of Our Lady of Guadalupe of Ponce).