The history of Caacupé begins long before its official appearance on administrative maps. The city's roots go back to the early 17th century and are inextricably linked to the legend of a Guarani Indian named José. According to tradition, while fleeing from a hostile tribe, he promised the Virgin Mary that he would carve her image from wood if he survived. True to his word, he created a statue around which a settlement gradually began to form.
The official founding date of the city is considered to be April 4, 1770, when Lieutenant Carlos Morphi, on behalf of the authorities, formally established the city at this location, recognizing its growing importance. Unlike many outpost towns of that time, Caacupé grew as a peaceful settlement, bringing together indigenous people and Spanish settlers around a common shrine.
The city's development was determined not so much by trade as by spiritual and geographical factors. The primary growth driver was the veneration of the "Virgin of the Miracles": the constant flow of pilgrims necessitated the creation of infrastructure, inns, and roads. The city got its name from the Guarani phrase "Ka'aguy kupe", which means "behind the forest" or "beyond the grove," as it was ideally situated in the picturesque hilly terrain of the Cordillera department.
From the very beginning, Caacupé was shaped as the "spiritual capital" of Paraguay. The early economy was closely tied to serving travelers, especially during religious festivals. The city's cultural environment was characterized by syncretism: Catholic traditions and the customs of the Guarani people were harmoniously intertwined, which is reflected in the local architecture and crafts.