The exact date on which this village was settled is unknown. The truth is that a group of huts and a small chapel were established around Las Víboras Creek in 1758. This settlement was located in such an inhospitable area that its very dwellers resolved to move, this time to the banks of Las Vacas Creek. This course of still waters with high cliffs helped fight the floods from the Paraná and Uruguay Rivers.
Artigas founded this town in February 12, 1816 and the place was named "Carmelo". There are no particular reasons for having chosen that name. However, every stable village or settlement had the moral and religious duty to submit themselves to the protection of some Saint or Virgin in those days. In this case, the first settlers had a special devotion for Del Carmen Virgin, who (according to legends) would appear at Mount Carmelo (very close to the present location of the city). Based upon these facts, it is believed that the name of Carmelo was officially adopted and many of its inhabitants were called this way. Today, Nuestra Señora del Carmen is the Patron Saint of the city and, every year on July 16, celebrations and blessings are organized in her honor. This festivity has attracted visitors from all neighboring towns and districts for years.