Identifying the ancestral components of genomes of admixed individuals helps uncovering the genetic basis of diseases and understanding the demographic history of populations. We estimate local ancestry on 313 Chileans and assess the contribution from three continental populations. The distribution of ancestry block-length suggests an average admixing time around 10 generations ago. Sex-chromosome analyses confirm imbalanced contribution of European men and Native-American women. Previously known genes under selection contain SNPs showing large difference in allele frequencies. Furthermore, we show that assessing ancestry is harder at SNPs with higher recombination rates and easier at SNPs with large difference in allele frequencies at the ancestral populations. Two observations, that African ancestry proportions systematically decrease from North to South, and that European ancestry proportions are highest in central regions, show that the genetic structure of Chileans is under the influence of a diffusion process leading to an ancestry gradient related to geography.