Coelho Pereira, an influential navigator and soldier, directed military actions against the French-allied Caetés Indians and, upon their defeat in 1537, established a settlement at the site of a former Marin Indian village, henceforth known as Olinda, as well as at another village Igaraçu, at the Igaraçu River.
In 1595 the captaincy suffered a severe blow.