Gernika-Lumo is the official name of the town, but there are not so many people that know about the origin of this " surname". When Gernika was founded in 1366 the marshes stretched as far as where the road now stands. The settlement took the name Gernika from the start, but was usually known as the "port of Lumo", after the municipality to which it belonged. Gernika had a trading port. The houses by the marsh had rings built into their outside walls to enable boats to moor there. The town stood on three major trade routes:
It was with this trade in mind that Don Tello, who was Lord of Biscay at the time, awarded Gernika its charter on 28th April 1366, separating it from Lumo. Thus, Lumo lost one of its most important areas and part of its former territory. On the other hand, Gernika was given some different privileges, such as the right to hold the weekly market. Due to all this, It did not take long for disputes to begin between Gernika and Lumo. These disputes reached their height in 1575, when Lumo won a major legal battle. As a result, the boundaries of Gernika were re-marked and the town was reduced to an area of 30,000 square metres, with just five streets: Artekale, Goenkale, Barrenkale, Azokakale and Santa María, which ran crosswise through the others. The church of Santa María stood inside the palisade that served as a town wall, and the church of San Juan stood outside it. The latter was destroyed during the bombing of the town and was not rebuilt afterwards.
These boundaries survived until 1882, when Gernika merged with Lumo. Nowadays there is a street in town named after this merger, called "8 de Enero" It was after this merger that the economic development of the town began: the railway reached here at the end of the 19th century, the river was channelled and an armaments factory and a number of workshops were set up.