The history of the alpaca begins 40 million years ago in what is now North America, where the ancestors of today's camelids evolved. Three million years ago, camelids moved across the Bering land bridge and into Asia (eventually to become the modern-day Bactrian and dromedary camels). At the same time, the very large camelid Hemiauchenia migrated into South America and into the high plains of the Andes mountains. It is believed to have evolved over the next million years into two new forms that were better suited to that environment: Lama and Paleolama. After moving back into the area of Mexico and the south central United States, Paleolama became extinct by 12,000 years ago, as did Hemiauchenia. The only camelids to remain anywhere in the Americas were the wild guanacos and vicuñas of what is now South America. (The photo at left shows the size difference of, left to right: a llama, alpaca cria, alpaca.)

With the domestication of alpacas and llamas beginning 6,000 years ago, a series of Andean cultures perfected the breeding of alpacas sporting luxurious soft fleece in a wide array of colors. Over the past 2-3,000 years, cultures such as the Chavín, Nazca and Huari produced colorful and intricately ornamented alpaca textiles, whose colors remain vivid to this day.

By the time of Peru's Inca empire, alpacas were highly valued in the economy and religion of this Andean culture. Details of the husbandry of these animals were diligently recorded. Strict rules and regulations existed regarding the disposition of various types of camelid fiber, with alpaca fleece being used only for the garments worn by noblemen. Caretakers of the alpacas were born into their position, and members of this social class were highly regarded.

With the Spanish conquest in 1536, the Inca empire fell into disarray, and its secrets of alpaca breeding were lost forever. Within a hundred years, 90% of the Inca's alpacas and llamas were lost, as were 80% of the native individuals of the region.

It was not until the mid-19th century that alpaca was actively processed in Europe. English investors eventually founded mills in Peru, where commercial production of rare alpaca yarns and garments remains a major industry to this day.