Under the more restricted definition of the term, Ladinos emerged in the sixteenth century, when Spanish domination was consolidated. The first Ladinos were Indians who were faced with the dissolution of their communities because of loss of their lands, because of congregation into towns (a policy that the Spaniards carried out coercively and from which some Indians tried to escape), or because the community disappeared as a result of an epidemic. Later, some Indians abandoned their communities to look for a better way of life; they established themselves in cities and tried to assimilate to the culture and values of the conquerors. During the colonial period, Ladinos were members of the Indian community, experts in matters pertaining to criollo culture. They could continue being Indians in racial terms, but they were treated differently.
Ladinos who adopted the values of Spanish culture—and in this way ameliorated their social position—were not well regarded. Rather, they were feared and distrusted because they had rejected their own people, and they were never totally accepted by groups of purely European origin. In the colonial cities of Chiapas and Guatemala, distinct groups of criollos and Ladinos formed, although miscegenation, which is prevalent in the area, blurred the distinction and made it more difficult to define the borderline between one group and the other.
With no definite criteria for identifying their group, Ladinos began to relate to the nascent "national state" on an individual basis and adopted state institutions. Although they established relations with Spanish and criollo groups and, subsequently, with mestizos, and attempted to assimilate their cultural practices, Ladinos generally remained in a subordinate position. Relations were reestablished with Indian communities years after the initial rupture.