San Diego entered the Mexican period in 1821, following Mexico’s independence from Spain. The region became part of the Mexican territory of Alta California, and the town gradually shifted from the Presidio Hill fort to the level lands below. In 1834, the Mexican government secularized Mission San Diego de Alcalá, redistributing its lands to former soldiers and expanding ranchos in the region. The town petitioned to form a pueblo, electing Juan María Osuna as its first alcalde, though population decline in the 1830s reduced its residents to roughly 100–150, causing the town to lose its pueblo status.

Despite challenges, San Diego played a major role in international trade, particularly in the hide and tallow industry, which brought attention from American merchants and writers like Richard Henry Dana, whose account Two Years Before the Mast highlighted the region’s commercial potential. Historic buildings from this period, including the Casa de Estudillo (1827), remain important cultural landmarks.

The Mexican–American War of 1846–1848 brought military conflict to San Diego. The town briefly changed hands between American forces and Californio partisans, with the Battle of San Pasqual marking one of the heaviest losses for American troops in California. Ultimately, American forces recaptured the town, and the war concluded with the Treaty of Guadalupe Hidalgo in 1848. San Diego, along with all of Alta California, was ceded to the United States, setting the stage for its transformation into a growing American city.