The land that is now Pennsylvania was actually first claimed by the Swedes under Peter Minuit in 1638. Minuit had agreed to help them establish a colony after having a falling out with Dutch officials. Although the Swedes did colonize the region on the west banks of the Delaware River, known at the time as Nya Sverige, or New Sweden, they were attacked and displaced by the Dutch in 1655. In turn, the British would dispatch the Dutch from the region in 1664.

Pennsylvania was founded in 1681 by William Penn. Penn was issued a land grant by King Charles II largely because of a significant debt owed to his father, Admiral Penn. At the time, the grant was one of the largest in terms of area ever known. It was named Pennsylvania, which means Penn's Woods, after Admiral Penn.

Penn quickly established a government based on religious freedom for the Quakers. Quakers did not believe in the strict rules imposed by the Puritan church. They believed that people could have a direct relation with God, rather than one mediated by a minister.The colony's religious tolerance soon attracted German and Scottish immigrants, and promoted more peaceful relations with local Indians. Furthermore, it helped Philadelphia grow into the most important city in the thirteen colonies, and it helped established Pennsylvania Dutch Country, where German "Deutsh" political and religious refugees formed farming communities.