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CSUDH was founded in 1960; however, the campus sits on land that has a long and rich history. The university's 346 acres were once a section of the first private land grant in Southern California—the Rancho San Pedro. Juan José Dominguez (1736-1809), a Spanish soldier, received the original grant of 75,000 acres in 1784 from King Carlos III of Spain. While much of the acreage has been sold and developed, portions remain in the possession of Dominguez descendants. The site chosen for the university was known as the Dominguez Hills, named after the family.

The California State Legislature authorized the establishment of the "South Bay State College" and Governor Edmund G. (Pat) Brown signed it into law on April 29, 1960. The need for a campus in the South Bay region of Los Angeles County became apparent in response to a rising population in the 1950s influenced by the growth of families of World War II veterans, and by emerging aerospace and defense industries.

Innovative modernist architect A. Quincy Jones created a campus physical master plan in 1964 and oversaw the design of buildings and development of the campus until his death in 1979.

In 1965, the university held its first classes at a temporary location in the California Federal Savings Bank in Rolling Hills Estates. The college was renamed California State College at Palos Verdes, and approximately 40 students enrolled and were taught by 11 faculty members, as well as administrators.

In 1965, the Watts Rebellion devastated a community and awakened the nation, bringing longstanding grievances and inequalities into the spotlight. The Watts Uprising is considered by many to have been one of the key turning points in the African American Civil Rights movement, and has served to shape scholarly and public understanding of race rebellions and the development of race relations in the United States.

Following the Watts Rebellion, Gov. Pat Brown visited the area and determined that the Dominguez Hills site in the soon-to-be City of Carson would provide the diverse, mostly minority population in nearby urban neighborhoods with the best accessibility to a college education.

CSC Palos Verdes became CSC Dominguez Hills in 1966 and was moved into a temporary location known as the Watt Campus, after its developer Ray Watt, that stood across the street from the future permanent site of the college. The opening of the permanent campus occurred in October 1968.