This article highlights the place of the spatio-legal imaginary in theorising urbanisation and Indigenous dispossession in Chile. Focusing on the Mapuche nation, we argue that we are witnessing another period of their historical struggles against territorial dispossession, which is shaped by polarised conceptions of urban, non-urban, and Indigenous spaces. We argue that internal colonisation is inseparable from processes of urbanisation that divorce Indigenous subjects from their territory based on two colonial principles, terra nullius and the supremacy of a Western worldview. These principles clash with Mapuche resistance that subverts these dichotomous categories. Viewing urban, non-urban, and Indigenous categorisations as co-constitutive and spatially continuous better reflects these ongoing struggles for territorial control in Chile.