This article discusses the colonial encounter of the Welsh and Tehuelche/Mapuche in the Welsh colony (Y Wladfa Gymreig), founded 1865. The Welsh sought to create a Welsh-speaking utopia in the ‘empty’ lands of Patagonia, paradoxically using this colonisation as a way to resist disparagement of the Welsh language and culture by an English-dominated state. The article deploys a ‘coloniality of power’ perspective and explores archive materials that reveal how both the Welsh and the indigenous communities whose land they colonised were caught up in coloniality and expanding capitalist modernity. I conclude that exploring the ambiguous relationship which results from this encounter complicates and deepens our understanding of how the coloniality of power works. Particularly, I argue that stripping away the ‘myth of friendship’ between the Welsh and indigenous is vital, not to diminish moments of genuine mutual affinity but rather to show how these are caught up in processes of colonialisation.