Long isolated and still remote, Northern Patagonia is the youngest area of the Chilean nation and the last to integrate. Chile only started promoting colonization in the early 20th century and many of the towns are barely 50 years old.

For thousands of years, the Chonos and Alacalufes people inhabited the intricate canals and islands, while Tehuelches lived on the mainland steppes. Rugged geography deterred European settlement, save for fortune seekers seeking the legendary 'City of the Caesars.' Many expeditions visited the area in the late 18th and early 19th centuries (including one that brought Charles Darwin), some in search of a protected passage to the Atlantic Ocean.

In the early 1900s the government granted nearly 10,000 sq km in and around Coyhaique to the Valparaíso-based Sociedad Industrial Aisén as a long-term lease for exploitation of livestock and lumber. The company dominated the regional economy, and colonists trickled into the region to claim remote lands for farming. Encouraged by a Chilean law that rewarded clearance with land titles, the Sociedad and colonists burned nearly 30,000 sq km of forest and destroyed much of Aisén's native southern beech in fires that raged for nearly a decade in the 1940s.

The region is sparsely populated, most notably south of Coyhaique, an area devastated by the 1991 eruption of Volcán Hudson. As with Volcán Chaitén's 2008 eruptions, it dumped tons of ash over thousands of square kilometers in both Chile and Argentina, ruining cropland and killing livestock by burying pasture grasses.

Salmon farming is a major industry and Patagonia's cold waters provide optimal farming conditions. The industry edged south after contaminating some Lakes District waters past sustainability, with waste from farms causing serious ecological disruption. The lobby for salmon farming is still quite strong and effective, given that there are few other industries in the region.

A strong public campaign contributed to the 2014 defeat of a number of proposed hydroelectric projects. In recent years these and other plans for industrialization defined the continual push and pull between development and conservation in this region. In 2017 the Chilean government accepted the donation of various private Patagonian parks put together by Tompkins Conservation and added more federal land, making Chile the most park-dense region of the world.