As early as 1502, rancherías were established on Cubagua, occupied for 3–4 months each year during trading. The island was of particular interest because of its rich pearl oyster beds. Eventually, the settlement became permanent and, by 1520, after the great Indian uprising, its resident population surpassed 300. On September 12, 1528 by a royal decree issued by Charles V, Nueva Cádiz was incorporated and became a city named Nueva Cádiz. It became the first Spanish town in South America.
By 1530 Nueva Cádiz had a population of 223 Europeans and 700 natives. At its peak (around 1535), it had over 1500 people. The depletion of the pearl oyster beds, however, became increasingly acute, causing the Spaniards to limit pearl production. In combination with the discovery of new pearl oyster beds on the Guajira Peninsula, this led to a decline of Nueva Cádiz. By 1539 there were less than 50 people left on Cubagua. After a hurricane destroyed the remaining buildings in 1541, the colony was completely abandoned.
The ruins, which are partly submerged beneath the sea, were declared a National Monument of Venezuela in 1979. In the 1950s and 1960s the area was examined by José María Cruxent who published works such as Nueva Cádiz, testimonio de piedra (1955) and Cubagua y el poblamiento oriental de Venezuela en las comienzos (1961) on Nueva Cádiz. The Museo de Nueva Cádiz in La Asunción contains relics unearthed at this site.
- Rouse, Irving; Cruxent, José María (1963). Venezuelan archaeology. New Haven: Yale University Press. Retrieved 9 June 2011.
- G., Jiménez Graziani Jiménez (1986). La esclavitud indígena en Venezuela, siglo XVI. Fuentes para la Historia Colonial de Venezuela. ISBN 978-980-222-001-4. Retrieved 9 June 2011.
- Transactions of the Caribbean Geological Conference. Queen's College Press. 1968. p. 33. Retrieved 9 June 2011.
- Raub, Kevin (1 August 2010). Venezuela. Lonely Planet. p. 203. ISBN 978-1-74179-158-7. Retrieved 9 June 2011.
- Simón, Pedro (1992). Noticias historiales de Venezuela. Fundacion Biblioteca Ayacuch. pp. 167–. ISBN 978-980-276-208-8. Retrieved 9 June 2011.
- Otte, E. (1977). Las perlas del Caribe: Nueva Cádiz de Cubagua. Caracas: Fundación John Boulton. ISBN 84-399-6754-3. (Spanish)
- Romero, Aldemaro (2003). "Death and Taxes: the Case of the Depletion of Pearl Oyster Beds in Sixteenth-Century Venezuela". Conservation Biology 17 (4): 1013–1023. doi:10.1046/j.1523-1739.2003.01406.x.