The encomienda system was a trusteeship system used during the Spanish colonization of the Americas, whereby conquistadors were granted the towns of the indigenous people they conquered. The conquistadors, known as encomenderos, were able to tax these people and summon them for labor. In return the encomenderos were expected to provide safety for the people through an established military and teachings in Christianity. This policy usually amounted to enslavement of the local population because of the abuse of powers by the encomenderos.

The downfall of the encomienda system began when Blasco Núñez Vela, the first viceroy of Peru, tried to enforce the New Laws. Many of the encomenderos were unwilling to comply with the New Laws and soon revolted against Vela.

Other problems of the encomienda system in Peru occurred due to the breaking up of extended families, or ayllus, which brought an end to their economic system of vertical exchanges . Not only this impaired the encomienda system, but so also did the epidemic diseases brought to America by the Europeans. These diseases, such as the plague and smallpox, killed a large percentage of the indigenous population because they had no natural defenses against them.