San Felipe had continuous occupation from the Mesoamerican Middle Preclassic period (c.1000–400 BC) and was still inhabited when the Spanish first arrived in the region in the mid 16th century.
The Castillo de San Felipe was built to protect the port of San Antonio de las Bodegas on the south shore of Lake Izabal from frequentpirate attacks, mostly by English pirates. After nightfall, passage along the river into the lake was blocked by a large chain that crossed from the fort to the far bank. San Antonio was the main port for receiving Spanish shipping carrying goods for the Captaincy General of Guatemala and was responsible for supplying and garrisoning the fort. Guatemalan records contain details of captains being appointed to the fort well into the 18th century. The position was a joint post, also including the position of mayor of San Pedro de Amatique and San Antonio de las Bodegas. The latter post was in name only, since the towns were soon abandoned due to constant slave raids by the Mosquito Zambo that left the Motagua delta and shores of Lake Izabal largely deserted, with those inhabitants that did not flee being sold into slavery in the British colony of Jamaica. A census taken in October 1776 recorded 122 inhabitants of San Felipe, all of whom were either Spanish or mixed race. In 1797 the garrison numbered 36 infantry.
Construction
A tower already existed on the site by 1604, when it is recorded as having been destroyed. The fort was built in 1644 under the orders of Diego de Avendaño, then governor of the Kingdom of Guatemala. At the time it was known as Fuerte Bustamente ("Bustamente Fort") and the Torreón de Defensa ("Defence Tower"). The design of the walls was modified by the oidor (high judge) Lara y Mogrovejo, from whom it gained the "de Lara" part of its name. It was rebuilt in 1651 under orders of Lara y Mogrovejo. The fort was redesigned in 1687 by
