In the mid-17th century, the region that is now Finland was part of the Kingdom of Sweden, where efforts were underway to bolster economic stability and security. Count Per Brahe the Younger, a prominent statesman and governor of the province of Ostrobothnia, recognized the need for a new settlement along the Baltic Sea to facilitate trade and encourage population growth. With the intention of creating a thriving commercial center, he chose to establish a town at a strategically advantageous location along the northern coastline.

On December 5, 1649, Count Brahe laid the foundations of Raahe, promoting it as an important port city. The town plan was designed to accommodate the logistical needs of maritime trade, and it was characterized by a grid layout that would allow for orderly expansion. Raahe's location made it particularly appealing for shipbuilding, fishing, and trade with other Baltic nations, and it soon attracted merchants and settlers eager to take part in the new economic opportunities.

Brahe’s vision for Raahe extended beyond its immediate economic benefits; he aimed to cultivate a community with a strong infrastructure that would support both commerce and the settlement of new residents. The establishment of Raahe also reflected the broader trends of urban development during this period in Sweden's history, where the establishment of new towns often coincided with the need for decentralized administration and governance in the vast provinces of the kingdom.