Colonia Dignidad is usually associated with the period of the military dictatorship and the subsequent era of democratic governments. In this article, however, we analyze the origins of Colonia Dignidad dating back to its establishment in Chile in 1961. Based on German and Chilean documentary sources, we argue that the drastic isolation of the german settlement and its regime of the forced seclusion of its members, led to the development of a sectarian community. The escape of an underage youth, in 1966, demonstrates that the systematic violation of human rights was a constitutive element of the enclave controlled by Paul Schäfer from its very beginning. Additionally, we study how the Colonia Dignidad phenomena interacted with the German and Chilean states and from the perspective of the historical period in which it emerged.