We will use a critical analytic approach inspired in Foucault's conceptual tools in order to develop a critical history of the Casa de Orates in Santiago and the inception of Chilean psychiatry, between the second half of the 19th century and the beginning of the 20th century. We will review the historical background of the asylum, the prison and the rise of the medical viewpoint in colonial society, contrasting Foucault's proposals with Chilean reality. Following this, we will analyse texts which narrate the history of the Casa de Orates in Santiago. As the main conclusion we propose that the development of psychiatry in Chile cannot be understood only through the practices of confining the mad. We conclude that we should consider processes that go beyond the history of the Casa de Orates, such as the birth of the biopolitical project and the rise of medical discourse, which in turn should be understood as bearing the mark of Colonialism/Modernity as was proposed by Anibal Quijano and Immanuel Wallerstein.