Granada is a department (state) in western Nicaragua (1,040 km2) with an estimated population of 110,326 (2003). The city of Granada is Nicaragua's fourth most populous city capital of the Granada Department. Granada is historically one of Nicaragua's most important cities both economically and politically. It is situated on the northwestern shore of Lake Nicaragua and was founded by Francisco Hernández de Córdoba on December 8, 1524. It has a rich colonial heritage, seen in its architecture and layout. Granada is commonly nicknamed the "Gran Sultana del Gran Lago" - the Great Sultan of the Great Lake.
It was named after the Ancient Spanish city of Granada by Hernández de Córdoba. This was done in honor of the defeat of the last Moorish stronghold, which had been Spanish Granada, by the Catholic King and Queen of Spain. Granada, Nicaragua was historically the sister capital in Central America to Antigua, Guatemala. During the colonial period, Granada maintained a flourishing level of commerce with ports on the Atlantic, through Lake Nicaragua (Cocibolca) and the San Juan River. The city has been witness and victim to many of the battles with and invasions from English, French and Dutch pirates trying to take control of Nicaragua. It was also where William Walker, the American filibuster, took up residence and attempted to take control of Central America as a ruling monarch. One of Walker's generals, Charles Frederick Henningsen, set the city ablaze before escaping, destroying much of the ancient city and leaving printed the words "Granada Was Here".
For many years Granada disputed with León its hegemony as the major city of Nicaragua. The city of Granada was favored by the Conservatives, while Léon was favored by the Liberals. For many years there was conflict that at times became quite violent between the cities' families and political factions. In the mid 1800s a compromise site was agreed on and the capital was finally established between both cities at Managua.
For the most part Granada avoided damage during the years of conflict in Nicaragua in the 1980s. Granada has long been a center of commerce, including timber, gold and silver. Granada's economy continues to grow as it is becoming the national tourism hub. Though Granada remains Nicaragua's fourth largest city, it is widely known for preserving some the finest colonial-era architecture in the country.