In 1776, Spain named Monterey as the capital of Baja (lower) and Alta (upper) California. That same year, Captain Juan Bautista de Anza arrived from Sonora with the first colonist for Spanish California; most of them bound for San Francisco. Monterey's soldiers and their wives lived at the Royal Presidio (located where the San Carlos Cathedral now stands) struggled to create a pueblo and raise families.

In 1818, in an effort to destroy Spain's presence in California, Argentinean revolutionary privateer, Hipólito Bouchard attacked Monterey. After the only known land and sea battle fought on the West Coast, Bouchard sacked the town. The damage from Bouchards raid was quickly repaired and during the next decade, residents began to expand outside the Royal Presidio, building residences, creating streets, and inaugurating businesses that would establish the foot- print of modern Monterey.