According to Inca legend, however, Cusco was founded by Manco Capac and his sister Mama Occlo around 1200 AD. Over the next two hundred years the valley was home to the Inca tribe, one of many localized warlike groups then dominating the Peruvian sierra. A series of chiefs led the tribe after Manco Capac, the eighth one being Viracocha Inca , but it wasn't until Viracocha's son Pachacuti assumed power in 1438 that Cusco became the centre of an expanding empire. As Pachacuti pushed the frontier of Inca territory outwards, so he also master-minded the design of imperial Cusco, canalizing the Saphi and the Tullumayo, two rivers that ran down the valley, and building the centre of the city between them. Cusco's city plan was conceived in the form of a puma, a sacred animal: Sacsayhuaman , an important ritual centre that doubled up as a fortified area for the town's people to retreat to when threatened, is the jagged, tooth-packed head; Pumacchupan , the sacred cat's tail, lies at the point where the city's two main rivers merge; while between these two sites lies Koricancha , the Temple of the Sun, reproductive centre of the Inca universe, the loins of this sacred beast. The heart of the puma, was Huacapata , a ceremonial square approximating in both size and position to the modern Plaza de Armas. Four main roads radiated from the square, one to each corner of the empire. Pachacuti's palace was built on one corner of Huacapata, while his grandson, Huayna Capac, situated his palace in the opposite corner, next to the cloisters of the Temple of the Sun Virgins. The overall achievement was remarkable, a planned city without rival at the centre of a huge empire, and in building their capital the Incas endowed Cusco with some of its finest structures. All important buildings were constructed from hard volcanic rock and streets ran straight and narrow, with stone channels to drain off the heavy rains.

By the time the Spanish arrived, Cusco was a thriving capital. Nobles and conquered chieftains lived within the body of the puma, servants and artisans on the outskirts, while subjects from all over the empire made regular official pilgrimages. Of all the Inca rulers only Atahualpa, the last, never actually resided in Cusco, and even he was en route to there when the conquistadores captured him at Cajamarca. In his place, Francisco Pizarro eventually reached the native capital on November 15, 1533. The Spaniards were astonished: the city's beauty surpassed anything they had seen before in the New World, the stonework was better than any in Spain and precious metals were used in a sacred context throughout the city, though most of all in Koricancha. As usual, they lost no time in plundering its fantastic wealth.

The Spanish city, divided up among 88 of Pizarro's men who chose to remain as settlers, was officially founded by Pizarro on March 23, 1534. Manco Inca was set up as a puppet ruler, governing from a new palace on the hill just below Sacsayhuaman. Within a year, power struggles between the colonists - two of whom were Pizarro's sons - had reached the point of open violence, though serious trouble was averted when their main rival, Almagro, departed to head an expedition to Chile. With him out of the way, Juan and Gonzalo Pizarro were free to abuse the Inca and his subjects, which eventually provoked Manco to open resistance. In 1536 he fled to Yucay, in the Sacred Valley, to gather forces for the Great Rebellion.

Within days the two hundred Spanish defenders, with only eighty horses, were surrounded in Cusco by over one hundred thousand rebel Inca warriors. On May 6, Manco's men attacked, setting fires among the dry thatched roofs and laying siege to the city for the following week. Finally, the Spaniards, still besieged in Huacapata, led a desperate attempt on horseback to break out, riding up to counterattack the Inca base in Sacsayhuaman, during which battle Juan Pizarro was fatally wounded. Incredibly, after a few days of desperate fighting, the Spanish defeated the native stronghold, putting some 1500 warriors to the sword as they took it - one of the most important battles in the conquest of Peru, for if the Incas had won, they would have regained control of all Peru except Lima.

Cusco never again came under such serious threat from its indigenous population, but its battles were far from over. By the end of the rains the following year, the small Spanish stronghold was still awaiting reinforcements: Pizarro's men were on their way up from the coast, while Almagro, returning from Chile, was at Urcos, only 35km to the south. Unsure of his loyalties and the cause of the Inca insurrection, Almagro tried to befriend Manco but the emperor chose to retreat into a remote mountain refuge at Vilcabamba - now known as Espiritu Pampa , deep in the jungle northeast of Cusco. Almagro immediately seized Cusco for himself and defeated a Pizarrist force arriving from Lima. For a few months the city became the centre of the Almagrist rebels until Francisco Pizarro himself arrived on the scene, defeated the rebel force on the edge of town and had Almagro garrotted in the main plaza. The rebel Incas, meanwhile, held out in Vilcabamba until 1572, when the Spanish colonial viceroy, Toledo, captured Tupac Aymaru - one of Manco's sons who had succeeded as emperor - and beheaded him in the Plaza de Armas.

From then on the city was left in relative peace, ravaged only by the great earthquake of 1650. After this dramatic tremor, remarkably illustrated on a huge canvas in the cathedral, Bishop Mollinedo was largely responsible for the reconstruction of the city, and his influence is also closely associated with Cusco's most creative years of art. The CusqueA±a school , which emerged from his patronage, flourished for the next two hundred years, and much of its finer work, produced by native Quechua and mestizo artists such as Diego Quispe Tito, Juan Espinosa de los Monteros, Fabian Ruiz and Antonio Sinchi Roca, is exhibited in museums and churches around the city.

Today Cusco possesses an identity above and beyond the legacy left in the andesite stones carved by the Incas. Like its renowned art, Cusco is dark, yet vibrant with colour. It's a politically active, left-of-centre city where street demonstrations organized by teachers, lecturers, miners or some other beleagured profession are commonplace. The leading light of Cusco's left, ex-mayor Daniel Estrada , left the city in 1996 to become a member of Congress in Lima, taking with him much of Cusco's political vigour. However, with the help of local architect, Guido Gallegos , he left behind a visual legacy for the city, in its elegant Inca-like modern fountains and statues, such as the Condor and Pachacutec monuments and the new plaza in San Blas, mostly built in the early 1990s under his auspices.

With the arrival of the new millennium, Cusco has become something of a magnet for mystics expecting it to be re-vindicated as "the navel of the world", the umbilical centre of Pachamama, Mother Earth, hence the mystic tours that are now available and the rituals that have been taking place at many of the ancient ceremonial centres in and around Cusco over the last few years. The community spirit remains strong, if diverse, and street demonstrations protesting against council policies are a regular occurrence