Founded in 1536 by Gonzalo de Alvarado, brother of Spanish conquistador Pedro de Alvarado, Gracias has a fascinating history. Its original name was Gracias a Dios (Thanks be to God), after the conquistador's exclamation of gratitude that, after wandering for days in the mountains, he had finally found land flat enough to build a settlement. From 1544–1548, Gracias served as the seat of the Audencia, the royal court that administered Spain's colony in Central America, an area stretching from Guatemala to Costa Rica. Internecine rivalries ended Gracias's glory days and the capital was moved to Antigua, Guatemala. The town's colonial history still resonates in the three churches you'll find along its cobblestone streets. A short walk up to the fort of San Cristóbal provides an inspiring view of the nearby mountains.
Gracias makes a good launching point for visiting nearby Lenca indigenous communities. La Campa and San Manuel Colohete are the most interesting to visit. The tourist industry bills the circuit as La Ruta Lenca (the Lenca Route). Transportation logistics and lack of accommodation in these small towns make organized day trips the best options, and tour operators here are happy to take you. They can also help you get to the nearby Celaque National Park, a large tract of cloud forest that contains the country's highest peak.