Set on the western shore of Lago de Nicaragua, some 50km southeast of Managua, GRANADA was once the jewel of Central America. The oldest Spanish-built city in the isthmus, it was founded in 1524 by Francisco Fernández de Córdoba, who named it after his hometown in Spain. During the colonial period Granada became fabulously rich, its wealth built upon exploitation: sited only 20km from the Pacific, the city was a transit point for shipments of gold and other minerals mined throughout the Spanish empire. In the mid-nineteenth century Granada fell to American adventurer William Walker, who gained control of the city – and, by default, the entire country for a brief time. Granada paid dearly for the eventual overthrow of Walker; as he retreated in the face of international resistance, he ordered for the city to be burned to the ground. Small scars from this fire remain visible in several parts of the city.
Today Granada is central to the Nicaraguan government's tourism ambitions. The city's popularity with foreign visitors has led to a large-scale restoration of the old colonial buildings, many of them newly repainted in pastel shades, and a burgeoning network of foreign-owned bars, restaurants and hostels have sprung up. The city also makes a good base from which to explore the lake, volcanoes, the Zapatera archipelago and Isla de Ometepe, while more adventurous travellers might head on from here to the Solentiname Islands and San Carlos.