Little is known about the origins of Bilbao, but there was clearly already a highly developed settlement on both banks of the river Nervión when Diego López de Haro V, Lord of Bizkaia, granted the city its charter in 1300 in recognition of its significance as a hub for trade and shipping.
The city's strategic location enabled it to continue growing. Maritime trade developed rapidly and the settlement spread on both banks of the river. Trade also brought cultural enrichment to the city as pilgrims passed through Bilbao on their way to Santiago de Compostela.
Over the 15th and 16th centuries, Bilbao consolidated itself as a centre for trade and mainstay of the economy of the Seignieury of Bizkaia. Trade with ports elsewhere in Europe grew, and was supplemented later by trade with the colonies in America. The population continued to grow and the city expanded.
The three original streets of the oldest part of the city were joined by four more in the mid 15th century, giving the old quarter the shape that it still retains today. Indeed, this area is still known as the "Seven Streets". The Cathedral of Santiago was built to replace an earlier church on the same site. This Gothic cathedral is now one of the emblems of the city.
Economic growth slowed in the late 16th and 17th centuries, but the city continued to expand. The construction of two new streets - Bidebarrieta and Correo - opened up the waterfront of El Arenal, which later became the nerve centre of life in Bilbao.
The city underwent further economic progress in the 18th century, and more room was needed to house the increasing population. But it was not until the 19th century that Bilbao underwent its greatest transformation: at that time the city enjoyed unprecedented development based on the output of the nearby mines, which in turn boosted maritime trade and activity at the city's port. At the same time, steelmaking and shipbuilding grew into the mainstays of its economic growth.
With the arrival of the railways, Bilbao consolidated its importance as an economic and financial centre still further. Two major banks - Banco de Bilbao and Banco de Vizcaya - were founded in the city, and by the turn of the century there was also a stock exchange.
As economic expansion was accompanied by urban growth the face of the city changed radically. Many of the biggest projects ever undertaken in the city were carried out, and many of its most significant buildings were constructed at this time. For the first time, Bilbao expanded significantly towards the district of Abando on the other side of the river. Straight, tree lined avenues and promenades were constructed in an architectural style that marked the beginnings of modern Bilbao. Major features of the city constructed around that time include the Plaza Nueva square, the current town hall building and the Arriaga theatre, inspired by the Paris Opera House.
In the early 20th century, Bilbao was the major reference point of the economy of the Basque country, and economically one of the strongest cities in Spain. Its spectacular growth, accompanied by significant cultural developments, was interrupted by the Spanish Civil War (1936-1939), but in the post-war years the city recovered its capacity to create wealth and became a magnet for migrants from elsewhere in Spain, who sought work at its flourishing industrial firms. The urban and industrial landscape of the city shifted once again, but Bilbao itself was unable to cater for all this rapid expansion, and migrants settled in the neighbouring municipalities along both banks of river, thus laying the foundations for today's Greater Bilbao.
By the end of the 20th-century, however, the economic boom was over and the steel industry slid into a deep recession which forced the city to rethink the basis of its economic development. In just a few years Bilbao and its surrounding municipalities were forced to undertake a difficult restructuring of industry and to deal with the negative consequences of that restructuring.
After years of economic uncertainty, Bilbao has recovered its energy as a service based city striving to regenerate its environment and its urban fabric. As former industrial sites have become available, the city has reshaped itself into an increasingly attractive form for visitors. The impressive Guggenheim Museum and the Palacio Euskalduna Concert Hall and Congress Centre are the flagships of Bilbao’s new style, and more and more areas continue to be recovered for the enjoyment of the city's people.