At the beginning of the 16th century, the Island, with a population of 30 000, inhabitants was divided into two governments, one in La Habana and the other in Santiago de Cuba. Havana was appointed as the capital city. Slowly, the economic activities grew and diversified. Cultivation and production of tobacco and sugar cane developed. Steadily, new villages were founded, generally far from the coasts, and the first seven villages grew. The first seven villages became wealthier and showed a more comfortable life-style, offering frequent distractions ranging from games and balls to bull fights and religious feasts, such as cross altars. Important religious buildings remain as an evidence of the strong religious activity, dominant in the social life. Among these buildings, mention must be made of the magnificent building of the Santa Clara Convent.

The ascent of the Bourbon dynasty to the Spanish throne at the beginning of the 18th century brought an updating of the mercantile concept presiding over colonial trade. Instead of weakening, the monopoly diversified and manifested in the economic life of all the colonies. In the case of Cuba, the monarchy implemented the monopoly on tobacco, already the most important produce in the Island, aimed at controlling not only the production of the aromatic leaf, but also the trade in its own benefit. Producers and merchants resented the measure, which gave way to several protests and revolts. The third of these revolts of tobacco growers was violently repressed with the execution of eleven tobacco planters in Santiago de las Vegas, a town close to the capital. Unable to beat the strict control of the monopoly, the wealthiest class decided to participate and benefit from it. In 1740, they, in association with Spanish merchants, managed to make the King interested, and obtained his permission to create the Real Compañía de Comercio de La Habana. For over two decades, this organization monopolized all the commercial activity in Cuba.

The 18th century witnessed successive wars between the major European powers, wars that in the American scenario pursued a defined mercantile interest. All these wars affected Cuba in one way or another, though the one that undoubtedly had more impact for Cuba was the Seven Years War (1756-1763). It was precisely during this war that Havana was attacked, overtaken and occupied by an English expeditionary force. The inefficiency of top Spanish authorities during the defense of the city contrasted with the readiness of the criollos to fight, whose most outstanding leader was José Antonio Gómez, a courageous militia captain from the nearby village of Guanabacoa, who died as a consequence of the wounds received in combat.

Once the Spanish domination was reestablished in the Western part of the Island, King Charles III and his "enlightened" ministers adopted a series of measures favoring development.