One of those on López de Villalobos's fleet was Andrés de Urdaneta, a friar as well as a pilot. He took a long time to return across the Pacific to Mexico, but when he arrived there he gave a report of what he had seen to the Viceroy Luis de Velasco and Velasco commissioned López de Legazpi to establish a Spanish presence in the Philippines.

Legazpi was a Basque originally from Guipúzcoa where he, like his father, had been a notary (escribano) and which he continued to be when in Mexico. He acted on behalf of the town council and he founded a cofradía, la Dulce Niña de Jesús. In 1565, when he set out across the Pacific, he was an elderly widower with nine children. Legazpi established himself first of all on the island of Leyte, then he went to Mactan, where Magellan had died. Finally he went to the large island of Luzón. The conquests of these places and others were relatively easy since, as an Augustinian friar, Martín de Rada wrote, "The Philippines had neither lords nor kings who ruled over large stretches of territory. Rather, the typical polity was a small pueblo which constituted a tiny republic of its own managed by a kind of oligarchy. The exceptions to this rule were those places such as indeed Manila, where Muslims had established a more ambitious, and I suppose effective, regime."

Those Muslims, said Fr Rada, were as much conquistadors as the Spaniards were and probably both less subtle and more brutal. Legazpi found it easy enough to persuade the indigenous people that they, the Spaniards, were liberators as well as new masters. All the same, Legazpi's expedition experienced some difficult moments in the first years for the naturales refused for a time to grow anything which the Spaniards might like to eat.

Legazpi founded a Spanish city at Manila on the site of the previous large Muslim town at more or less the same time as one of his grandsons, Juan de Salcedo, and a deputy commander, Martín de Goití, began the conquest of the rest of the large island of Luzón. Manila became the Spanish capital of the islands.

The Manila galleon, which carried Chinese products such as porcelain or silk, to Acapulco in New Spain, to exchange for silver, then began its long, remarkable history. About now there began the Spanish romance with the idea of carrying on the conquest of the Philippines into China. First Legazpi himself can be found to be writing to King Philip to propose the building of six galleys to "run down the coast of China and reach agreements with rulers on the mainland". Very soon an Augustinian too wrote of China as if it were already the next item on the Spanish imperial agenda: "To conquer so big a territory and one with so many people it will be necessary to have people ready to deal with anything which may happen, even though I have been told that the Chinese are anything but bellicose." That was in a letter of July 1569.