Ever since 1959, Chaitén has been the capital of Palena. This port city is the main commercial and administrative center in the region. Its history is quite recent, as in 1933 its population was made up by three families and by 1946, a radio was settled down in the town and the construction of a road towards Lake Yelcho had started.
“Chaitén” derives from the word “chain-chaitun”, which stands for "water basket". The native Huilliches gave the area that name due to the topographic features of the terrain and the heavy rainfalls.
In the mid twentieth century, Chaitén was commercially connected both to Futaleufú and Yelcho, as it was from this location that goods were distributed by eight-oar barges that crossed from Puerto Cárdenas to Puerto Ramírez. Once there, they were transported by horse to Palena.
In 2008, the eruption of the Chaitén Volcano was a determining factor. The entire population had to be quickly evacuated. One year later, the government of Chile resolved that Chaitén should be founded again along with Santa Bárbara. However, in 2010, it was finally decided that the capital should remain at northern Chaitén.