Gran Chaco (grän chä´kō) or Chaco, c.250,000 sq mi (647,500 sq km), extensive lowland plain, central South America. It is sparsely populated and is divided among Paraguay, Bolivia, and Argentina. Some of the highest temperatures in the southern continent are reached there. To the north of the Pilcomayo River and to the west of the Paraguay River is the section known as the Chaco Boreal, which divided between Bolivia and Paraguay. This is arid land, dotted with swamps in the rainy season and with stretches of dense forest in which the quebracho tree abounds. Tannin extraction from the quebracho is an important economic activity there; large factories have been built for this purpose. In recent years cattle ranching has become an increasingly important industry, especially in Paraguary, leading to significant deforestation. The Chaco Central, in Argentina S of the Pilcomayo River and N of the Bermejo River, has much the same aspect. Cotton and quebracho are important there. Below the Bermejo, also in Argentina, is the Chaco Austral, which merges with the Pampa in the south. The plains of the Chaco, humid in the extreme east, grow increasingly arid toward the west. The eastern part is the main inhabited section of the Gran Chaco.
The discovery of oil in a narrow strip of the barren section of the Chaco Boreal, at the foot of the Bolivian Andes, precipitated the Chaco War, 1932–35, between Bolivia and Paraguay. This territory of the Gran Chaco had been disputed since 1810. Technically the Gran Chaco was intended to be part of Bolivia since it had been part of the audiencia of Charcas, but Bolivia paid little attention to this wasteland and Paraguayan settlers opened up the region while Paraguayan soldiers pushed back the natives. Thousands of Paraguayan colonists brought wealth to Paraguay by gathering quebracho and raising cattle. An armed conflict between Paraguay and Bolivia resulted as Bolivia sought access to the Paraguay River to ship oil to the sea and Paraguay refused to give up the lands. More than 100,000 lives were lost, and the war was concluded in 1935 only when both sides were exhausted. After three years of mediated negotiation following the end of hostilities, Paraguay and Bolivia signed (1938) a treaty. Three quarters of the disputed Chaco Boreal went to Paraguay; at the same time Bolivia was granted a corridor to the Paraguay River, the privilege of using Puerto Casado, and the right to construct a Bolivian port. A treaty finally demarcating the border between Bolivia and Paraguay was not signed until 2009.