During the later half of the 16th century, Queen Elizabeth I's military leaders attempted to conquer the province of Ulster. Their first attempt at Derry was in 1566, but the stronghold that they set up lasted only a few years. In 1600, a more successful garrison was set up during the Nine Year's War against the Gaelic O'Donnell and O'Neill earls. The English were successful this time, and they established a small trading settlement at the end of the war, which was given the status of a city. In 1608, the settlement was practically wiped out by an attack by the chieftain of Inishowen, Cahir O'Doherty.
At this time Gaelic Ulster was leaderless, as a result of the 'Flight of the Earls'. James I, now the King in London, decided that Ulster would be colonized by English and Scottish Protestants. Part of the colonization was to be organized by the wealthy livery companies of London. Derry was rebuilt across the Foyle and was fortified by large stone walls, and was the last settlement in Ireland to do so. These stone wall fortifications are the best preserved on the island.
As a result of the rebuilding and colonisation, the settlement was renamed Londonderry. It was the largest planned settlement in the British Isles at the time. It used the best town-planning principles of the time, taken from around the continent.