The early years of colonial rule were marked by a turmoil of uprisings, political wrangling and natural disaster. In 1541, following a massive earthquake, a great wall of mud and water swept down the side of Agua volcano, burying the capital. The surviving colonial authorities moved up the valley to a new site (at present-day Antigua), where a new city was established. The new capital controlled the provinces of the Audiencia de Guatemala (Costa Rica, Nicaragua, El Salvador, Honduras, Guatemala and Chiapas in Mexico) and was the region's center of political and religious power for two hundred years. By the mid-eighteenth century its population had reached some 80,000 and the city boasted some of the finest buildings in the hemisphere, until another huge earthquake destroyed the city in 1773 and the capital was moved again to its present-day site.

Colonial society was rigidly structured along racial lines, with pure-blood Spaniards at the top, indigenous slaves at the bottom, and a host of carefully defined racial strata in between. There was very little in the way of instant plunder in Central America - certainly none of the gold and silver of Mexico and Peru - and the economy was based on agriculture: livestock, cacao, tobacco, cotton and, most valuable of all, indigo were all farmed. At the heart of the colonial economy was the system of repartamientos , whereby the ruling classes were granted the right to extract labour from the indigenous population. It was this that established the process whereby the Maya population were transported to the Pacific coast to work the plantations, a pattern (if no longer state-enforced) that continues to this day.

Perhaps the greatest power in colonial times was the Church , whose wealth from sugar, wheat and indigo concessions, based on the exploitation of a Maya labour force, fostered the construction of some eighty churches, plus schools, convents, hospitals, hermitages, craft centres and colleges. In the countryside, scattered native communities were merged into new Spanish-style towns and villages, making exploitation that much easier. Though Maya social structures were also profoundly altered, in the distant corners of the highlands priests were few and far between and cofradía (brotherhood) groups and principales (village elders) developed a religion of Catholic and Maya traditions that has persisted to this day.

Even more brutal than the social changes were the diseases that arrived with the conquistadors. Waves of plague, typhoid and smallpox swept through a people lacking any natural resistance to them. It was the devastating impact of these diseases that ensured that the small Spanish invading force was able to maintain control in Guatemala: around ninety percent of the Maya population was wiped out within a few years of the arrival of Alvarado.

Two centuries of colonial rule totally reshaped the structure of Guatemalan society, giving it new cities, a new religion, a transformed economy and a racist hierarchy. Nevertheless, the impact of colonial rule was perhaps less marked than in many other parts of Latin America. Only two sizeable cities were created and many outlying areas received little attention from the colonial authorities. While the indigenous population was ruthlessly exploited and suffered enormous losses at the hands of foreign weapons and imported diseases, its culture was never eradicated. There was little profit for the Spanish in the mountains - no gold, very little silver, and harsh terrain - so the colonists concentrated instead on developing agriculture in more profitable regions like the Pacific coast. In the relative isolation of the highlands, the Maya simply absorbed the symbols and ideas of the new Spanish ideology, fusing Maya and Catholic traditions to create a unique synthesis of old and new world beliefs