In 1681, in partial repayment of a debt, Charles II of England granted Penn a charter for what would become the Pennsylvania colony.Despite the royal charter, Penn bought the land from the local Lenape to be on good terms with the Native Americans and ensure peace for his colony.Before Penn left Philadelphia for the last time, he issued the Charter of 1701 establishing it as a city.Though poor at first, the city became an important trading center with tolerable living conditions by the 1750s.The Dutch considered the entire Delaware River valley to be part of their New Netherland colony.In 1638, Swedish settlers led by renegade Dutch established the colony of New Sweden at Fort Christina (present-day Wilmington, Delaware) and quickly spread out in the valley.

The English conquered the New Netherland colony in 1664, though the situation did not change substantially until 1682 when the area was included in William Penn's charter for Pennsylvania.

These societies developed and financed new industries, attracting skilled and knowledgeable immigrants from Europe. The city remained the young nation's largest until the late 18th century, being both a financial and a cultural center for America.

Philadelphia's importance and central location in the colonies made it a natural center for America's revolutionaries. In 1816, the city's free black community founded the African Methodist Episcopal Church (AME), the first independent black denomination in the country, and the first black Episcopal Church.

Penn named the city Philadelphia, which is Greek for "brotherly love," derived from the Ancient Greek terms φίλος phílos (beloved, dear) and ἀδελφός adelphós (brother, brotherly).

As a Quaker, Penn had experienced religious persecution and wanted his colony to be a place where anyone could worship freely.