The economic success of the Virginia colony convinced English aristocrats that there was money to be made in owning colonies in the New World. King Charles II, gave a group of eight noblemen a large tract of land to the south of Virginia colony in 1663. They called the new colony "Carolina", the Latin form of Charles.

The new proprietors advertised the land as a fair and spacious province in the land of America. They first tried to get settlers already in the new world to settle in the colony, but that was not successful. In August 1669 three ships left with the first settlers. Each family had paid 500 Pounds for their part of the settlement. They founded the settlement of Charlestown. Within two years there were 271 men and 69 women in the settlement
The proprietors of the settlement set up a system of government that was called "the Fundamental Constitution of the Carolinas". One of the authors of the Constitution was John Locke. It provided for an independent parliament in the colony, which gave greater power to the owners of large lands.

The growth of the Carolina colony was slow. The coastal land was swampy and many of the early inhabitants came down with malaria. The proprietors of the colony wanted to offer large land holdings to a small number of settlers. This limited the number of settlers and slowed down the growth of the colony.

The settlement of northern and southern Carolina were very different. Settlers from Virginia seeking more land, while settlers in the Southern part of the colony were coming from the West Indies and Europe mostly settled Northern Carolinas. Settlers in the northern part grew tobacco, while the settler in the Southern part of the colony grew rice.
The parts of the colony grew apart and finally, in 1712 they separated and became North and South Carolina.