The first literature reference to chinchillas dates back to 1590 in a book published in Seville, entitled 'Historia Natural y Moral de las Indias', written by Father José de Acosta: (from Spanish) "About mountain animals. Chinchillas are another type of small animals such as squirrels. They have a fur (coat) that is of wonderful softness".

One of the first people to think of breeding chinchillas for profit was the Jesuit priest Juan Ignacio Molina, who was also the first person to provide an accurate description of Chinchilla in 1810. There were repeated attempts to breed these animals in captivity. The first reliable report of successful breeding attempt in captivity comes from Frederico Albert (1900), who was director of the zoological and botanical research station at Santiago, Chile. He reports in his article 'La Chinchilla' about a certain Francisco Irrazaval in Santiago who had received a pair of chinchillas in 1895. The first chinchilla was born that same year and the pair continued to produce 2 litters a year until the outbreak of an epidemic during the summer of 1896 ruined this excellent breeding success, and all the animals, 13 at that time, died within a period of two months.

By the end of the 19th century, chinchillas had become quite rare due to hunting for their fur.  Mathias F. Chapman, a mining engineer from California, was working in Chile in 1918 when he purchased a chinchilla as a pet and took a liking to it.  He envisioned raising a whole herd of chinchillas and he applied to the Chilean government for permission to capture and transport several animals to the US.  At this point, chinchillas were already close to extinction from humans killing them for the fur trade.  The Chilean government was reluctant to grant trapping permission, but Chapman persisted, and eventually the government allowed him to catch them.

Chapman and a group of men searched the mountain for three years and caught only eleven chinchillas.  He then took the 12,000 foot climb down over a period of twelve months so the chinchillas could acclimate to the changing environment.  He then brought the eleven wild chinchillas he had captured to the United States for breeding, where he started the first chinchilla farm.  Only three of these chinchillas were female.  This was the beginning of the domestic chinchilla.  Since the mid-1960s, chinchillas have become increasingly popular as house pets.