Soon Cabot and his men heard tales of silver mines far up the river, and of the existence of a great civilised empire on its remote headwaters. Silver ornaments were shown which had come down hand to hand from Peru or Bolivia. Cabot determined to abandon his commission to the Moluccas, and to find the country whence the silver came. Naturally, his first effort was directed up the broad channel of the Uruguay, but on ascending this river it was soon evident that the mines and civilised country he was seeking did not lie on its banks. Fifty miles up the river at San Salvador the Spaniards attempted to establish a little post which is sometimes referred to as the earliest settlement in Uruguay or Argentina. It was probably intended as a mere supply depot and point of refuge, conveniently near the sea to aid the up-river expedition. However, the warlike Indians of Uruguay soon left no trace of it. Cabot entered the Paraná, where he spent three years in an unsuccessful effort to reach Bolivia. He and Garcia sailed back to Spain without leaving even a settlement behind them, but they were thoroughly convinced that an adequate expedition could find the silver country.

The tribes who inhabited Uruguay were the fiercest Indians encountered by the conquerors of South America. For two centuries they succeeded in preventing the establishment of settlements in their territory and kept out Spanish intruders at the point of the sword. The Spaniards greatly coveted the north bank of the Plate and made effort after effort to get a foothold there, but these savages managed to maintain themselves for a hundred and fifty years in the very face of Buenos Aires. The river shore itself was the last accessible and fertile region to be subjected to the whites. A century elapsed after the foundation of Buenos Aires before Colonia was occupied by the Portuguese, and another fifty years went by before Montevideo had been settled and fortified. Uruguay in pre-Spanish times, as well as since, was a meeting-ground for different peoples. One after another the Guarany tribes crowded into this favoured region from the north and west, and the old inhabitants had to fight and conquer, or be thrust into the sea. The bravest, best armed, and best organised tribes survived in the harsh struggle. Of the Indians inhabiting Uruguay when the Spaniards discovered the Plate, the principal ones were the Charruas. They occupied a zone extending around from the Atlantic, along the Plate, and a short distance up the Uruguay. This strong and valiant race never submitted to the Spaniards, and when at last they were defeated and crowded back from the coast well on in the eighteenth century, they retired to the north and maintained their freedom for many years. They belonged to the great family of Tupi-Guaranies, who occupied most of eastern South America at the white man's advent, but they were more nomadic in their habits and had developed the art of war to greater perfection than the mother tribes of the more tropical parts of South America.

In their fights against the Spaniards, they sometimes gathered armies of several hundreds which fought with a rude sort of discipline, forming in column and attacking in mass with clubs after discharging their arrows and stones. Possibly they learned some of their tactics from the white men, but it is certain that before the invasion they had developed a tribal organisation which enabled them to bring far larger bodies into the field than the tribes to the north, and that soon after the arrival of the whites they learned the military uses of the horse. Personal bravery and fortitude were the virtues most admired among the Charruas, and they chose their chiefs from those who had most distinguished themselves in battle. They did not practise cannibalism like their brother Guaranies on the Brazilian coast; they killed defective children at birth; they were moderate in their eating, lived in huts, and in winter covered themselves with the skins of animals. Altogether, they seem to have much resembled the more warlike tribes among the North American Indians and to have made the same effective resistance to the whites as did the Iroquois or Creeks. Such a fierce and indomitable people terrorised the Creoles, and settlement proceeded on lines of less resistance. The coast of Uruguay was long known as the abode of red demons who showed little mercy to the adventurous white who dared build a cabin on the shore, or ride the plains in chase of cattle. The forts established from time to time by the Spanish authorities in the early days were invariably starved out and abandoned, and the white man obtained a foothold only after the Portuguese and Spanish governments had fortified towns with walls, ditches, and artillery, which could be supplied with provisions from the water side, and after Entre Rios had been overrun by the gauchos.

Warned by the experiences of Solis and Cabot on the north shore, Mendoza, the first adelantado of the Plate, on his arrival in 1535, selected the south bank of the river as the site of the fortified port which he proposed to establish at the mouth of the Paraná as a base for his projected expedition up the river. His effort failed completely; he abandoned Buenos Aires, and the remnants of his expedition fled to Paraguay and founded Asuncion. In 1573 Zarate, the third adelantado, made a serious effort to establish a post in Uruguay. He had three hundred and fifty well-armed Spanish soldiers, more than the number with which Pizarro had conquered the empire of Peru, but they were not enough to make any impression on the Charruas. A company of forty men hunting wood was set upon and massacred, and when the main body tried to avenge this defeat, it, too, was driven back and only escaped to the island of Martin Garcia after losing a hundred men. The survivors were rescued by Garay, the most expert and successful Indian fighter of the time.

This experienced and far-sighted officer wisely left the Charruas alone and devoted his efforts to the other side of the river, where, in 1580, he founded the city of Buenos Aires. Hernandarias, the Creole governor of Buenos Aires, who shares with Garay the honour of establishing the Spanish power in Argentina, and who had already defeated the Pampa Indians from the Great Chaco in the north to the Tandil Range in Buenos Aires province, attempted, in the early years of the seventeenth century, to subdue the Charruas. He disembarked at the head of five hundred men in the western part of Uruguay. Few details of the campaign which followed have been preserved, but it is certain that the Spanish force was destroyed and that Hernandarias himself barely escaped with his life. Thenceforth, for more than a century, the Spaniards made no serious attempts to interfere with the Charruas; the coast of Uruguay was shunned by European ships, and the interior remained absolutely unknown.

It is probable, although not certain, that the Jesuits on the Upper Uruguay established some villages of peaceable Indians in the north-western corner of Uruguay proper, in the middle of the seventeenth century. A few Indians, it is certain, gathered under Jesuit control on an island in the Lower Uruguay, some fifty miles above Martin Garcia, about 1650. This was known as the Pueblo of Soriano, and is often referred to by Uruguayan historians as the first permanent settlement in their country. However, no real progress was made toward getting possession of Uruguay. The Charruas proved refractory to Jesuit influence, and only the milder Yaros and the tribes on the Brazilian border could be converted.

The horses and cattle which the Spaniards had introduced multiplied into hundreds of thousands and roamed undisturbed over the rolling, grassy plains of Uruguay, and occasionally parties of Creoles would land on the shore of the Plate and at the risk of their lives kill some steers and strip them of their hides. As time went on, the Indians became used to the white men and some trading sprang up, but for a full century after Buenos Aires had been in existence Uruguay remained unsettled by civilised man.