Toluca (tōlōˈkä) [key], city (1990 pop. 327,865), capital of Mexico state, central Mexico. Located on the central plateau, Toluca (alt. c.8,760 ft/2,670 m) has a year-round cool climate. It was established as a settlement in 1530 by Hernán Cortés, who had received the Valle de Toluca as a grant from Emperor Charles V. The surrounding plain is fertile, producing grain, fruits, and vegetables. Cattle raising is important. The city has become increasingly industrialized, and has food processing, beverage, and automobile assembly plants, as well as flour, cotton, and woolen mills; it has also experienced growth as an outlying suburb of Mexico City. Despite industrialization the city is still known for its traditional handicrafts. Two small rivers run through the town, and nearby is an inactive volcano, the Nevado de Toluca, called also Xinantecatl and Cinantécatl.