The aim was to inquire on the historical background of Panguipulli Forestry and Timber Complex, a forestry company that emerged in 1971 in the province of Valdivia, South-central Chile. The company managed an area larger than 400,000 hectares and employed over 3,000 workers, functioning under a co-management scheme supported by both workers and state. We carried out a literature review that included scientific articles, books, theses and reports. Additionally, in-depth interviews were conducted with two informants who were involved directly in the historical development of Panguipulli Forestry and Timber Complex. We inquired in both the underlying social processes and direct events that influenced the emergence of the forestry company. A long period of encroachment on indigenous land and the emergence of a rural working-class resulting from the activities of a novel forestry industry fall within the former. While, on the other hand, key political reforms, as well as the coordinated actions led by forestry workers, account for the latter. We argue that the rise of Panguipulli Forestry and Timber Complex is the result of a longstanding attempt by workers and indigenous people to subvert power relations and domination established from the European colonization of the mid-nineteenth century. The research provides relevant information that contributes to the fields of environmental history and local identity, which in turn offer key elements for a current discussion of forestry and rural development.