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Montevideo ( Spanish pronunciation:   [monteβiˈðe.o] ) is the capital and largest city of Uruguay . According to the 2011 census, the city proper has a population of 1,319,108 (about one-third of the country's total population) in an area of 194.0 square kilometres (74.9   sq   mi) . The southernmost capital city in the Americas , Montevideo is situated in the southern coast of the country, on the northeastern bank of the Río de la Plata .

The city was established in 1724 by a Spanish soldier, Bruno Mauricio de Zabala , as a strategic move amidst the Spanish - Portuguese dispute over the platine region . It was also under brief British rule in 1807 . Montevideo hosted all the matches during the first FIFA World Cup . Montevideo is the seat of the administrative headquarters of Mercosur and ALADI , Latin America ’s leading trade blocs, position that entailed comparisons to the role of Brussels in Europe .

Montevideo has consistently been rated as having the highest quality of life of any city in Latin America: by 2015 has held this rank every year during the last decade. As of 2010 , Montevideo was the 19th largest city economy in the continent and 9th highest income earner among major cities . In 2015, it has a GDP of $ 40.5 billion, and a per capita of $24,400.