Archaeological findings indicate the fertile valley in which Arequipa is situated has been occupied back to 5000 – 6000 BCE. In the 15th century, the region, then occupied by Aymara Indians, was conquered by the Inca and served as an important supplier of agrarian products to the Inca Empire. The modern city of Arequipa was founded on 15 August 1540, by Garcí Manuel de Carbajal, an emissary of Spanish conquistador Francisco Pizarro. Arequipas' first mayor was D. Juan de la Torre y Díaz Chacón, one of the most important conquistadores and founders of Peru.

One year later, King Charles V of Spain gave it the rank of 'city' and the coat of arms that it still bears. Spanish influence left many relics and colonial architecture, which reminds the visitor of the city's colonial past.

This led Arequipa to develop a large mestizo population as its demographics changed and grew over the centuries. Since the late 1940's, however, there has been a huge and increasing immigration from the Peruvian sierra, thus changing the demographic and cultural character of the city.

Throughout history Arequipa remained relatively isolated during colonial and early republican times, but that changed in 1870 when a Southern railroad to the coastal port of Mollendo was inaugurated, opening trade via the Pacific Ocean. The building and expansion of more roads in the 1930s also led to a direct connection with the Pan-American Highway, strengthening Arequipa's links to the rest of the Americas. Since then, the city has remained the center of commerce between Lima and all of southern Peru.

Arequipa served as a bastion of nationalism during Peru's struggle for independence from Spain in the early 19th century. Later, it served as a rallying point during the War of the Pacific (1879 – 1883) with Chile.

Villages from pre-Incan times are still in use today by many different farmers. Some of these farmers include those from the districts of Chilina, Socabaya, Paucarpata, Characato, and Sabandia.

Arequipa has experienced many earthquakes. It was almost destroyed by one in 1868, and on June 23, 2001, Arequipa was badly damaged by an earthquake of 7.9 on the Richter scale. In June 2002, Arequipa was completely paralyzed for a week by strikes and riots in protest of the privatization of two regional electricity-generating plants.