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There has been a city in the vicinity of the present capital since around 1054, when the Pipils founded the city state of Cuscatlán in the Zalcuatitán valley, stretching between what are today the towns of San Jacinto and Santa Tecla. Although the Spanish first arrived in the area in June 1524, they did not succeed in establishing a settlement until 1528. This Villa San Salvador , to the south of where Suchitoto now stands, is thought to have been named after the day of Transfiguration of the Saviour of the World (El Salvador), the date of a conclusive victory against the Pipils. For reasons which are not clear, the settlement was moved to its present location in 1545, and granted the title of city in September 1546. By 1570, according to Spanish chronicler López de Velasco, there were 150 Spanish inhabitants, of whom sixty or seventy were encomenderos , a specific type of landholder.

Rapid growth came only in the late eighteenth century , after San Salvador was named the first intendencia within the Reino de Guatemala in 1785, stimulating trade and commercial development. Growing pressure within the country and across the isthmus to break away from Spain was particularly evident here; Delgado's first call for independence was issued from San Salvador, and the city became the first capital of the Central American Federation in 1824. The city continued to grow slowly and steadily, becoming capital of the Republic of El Salvador in 1840.

A series of destructive earthquakes throughout the nineteenth and twentieth centuries levelled most of the centre and ensured that virtually nothing remains of colonial San Salvador; today, the oldest buildings date back only to around the end of the nineteenth century. On October 10, 1986, in the midst of the civil war, another earthquake, measuring 5.4 on the Richter scale, destroyed around 60,000 houses and buildings, leaving six hundred dead and thousands injured and homeless. As if this were not enough, the air force bombed areas of the city thought to be hotbeds of guerrilla support in November 1989, in response to the FMLN's "final offensive" on the country's major cities. While recovery and rebuilding has continued in the decade since then, the scars of conflict are still painfully evident in some sections of the city.