Events far to the north in Mexico determined the future of the country that would come to be called Nicaragua. After the fall of the Aztec city of TeotihuacA?n in 1000 AD, displaced Mexica (Aztec) migrated southward through the isthmus on the strength of a prophecy that they were to settle where they saw a lake with two volcanoes rising from the water - which they found in the striking form of Isla de Ometepe in Lago de Nicaragua.

Two groups of pre-Columbian peoples settled on the shores of the lake. Roughly divided into the Chorotegas and the Nahuas , it is still possible to tell who settled where by place names - Momotombo, Masaya, Niquinohomo and Nandaime come from the Chorotegan language, while Managua, Masatepe, Tipitapa and Chinandega are Nahuatl words. The food - maize, beans, chillies and chocolate - and culture of these people continued to closely resemble that of the Aztecs, even after centuries of living far away from metropolitan Aztec culture.

These people called themselves the Niquirano and were governed by chief Nicarao , a rich cacique (chief) from near present-day Rivas who came to be called Nicaragua by the Spanish, giving the modern country its name. In 1522 Nicarao welcomed Gil GonzA?lez de Avila , an intrepid explorer who had made his way to Nicaragua on foot and by boat from PanamA? and Costa Rica, becoming the first Spaniard to arrive in the area. Nicarao allowed his people to be baptized and to mix interracially with the Spanish conquerors.

The inhabitants of central Nicaragua, the Chontales, Matagalpas and Populucas , were a different ethnic group, related to the Maya of Honduras, and offered far more resistance to the Spanish, though their language and peoples did not survive the Conquest. On the Atlantic coast the pre-Miskito Sumus and Ramas (of whom little is known) made up the indigenous population. Nearly all the coastal peoples, except the Rama, mixed racially with the Afro-Caribbean population who came to its shores as freed or escaped slaves from British West Indian colonies.