The Spanish and Mexican governments made many concessions and land grants in Alta California and Baja California from 1775 to 1846. The Spanish Concessions of land were made to retired soldiers as an inducement for them to remain in the frontier. These Concessions reverted to the Spanish crown upon the death of the recipient. The Mexican government later encouraged settlement by issuing much larger land grants to both native-born and naturalized Mexican citizens. The grants were usually two or more square leagues, or 35 square kilometres (14 sq mi) in size. Unlike Spanish Concessions, Mexican land grants provided permanent, unencumbered ownership rights. Most ranchos granted by Mexico were located along the California coast around San Francisco Bay, inland along the Sacramento River, and within the San Joaquin Valley.

When the government secularized the Mission churches in 1833, they required that land be set aside for each Neophyte family. But the Native Americans were quickly brushed aside by Californios who, with the help of those in power, acquired the church lands as grants. The indigenous peoples of the Americas ("Indians") instead became virtual slaves of the rancheros.

Spain made about 30 concessions between 1784 and 1821, and Mexico issued about 270 land grants between 1833 and 1846. The ranchos established permanent land-use patterns. The rancho boundaries became the basis for California's land survey system, and are found on modern maps and land titles. The "rancheros" (rancho owners) patterned themselves after the landed gentry of New Spain, and were primarily devoted to raising cattle and sheep. Their workers included Native Americans who had learned Spanish while living at one of the former Missions. The ranchos were often based on access to the resources necessary for raising cattle, such as grazing lands and water. Land development from that time forward has often followed the boundaries of the ranchos, and many of their names are still in use.