On the morning of October 12 1492, After exploring a number of the islands in search of gold, Christopher Columbus stepped ashore on an island in the Americas.  An island he named Hispanola. It was here that the crew asked and Columbus agreed to leave 39 colonists.
He observed that the land was devoid of domesticated livestock like that found in Europe.  Future voyages would include domestic farm stock including horses. 

Two settlements were created but failed before establishing Santo Domingo where, in November of 1493 Columbus brought ashore 20 stallions and 5 mares.  They would become the foundation stock for the remount stations of the conquistadors.  These horse were of fine quality, representing the ability to meet the challenges that the new world would present to settlers.  These horses were a mixture of Barb, an animal of great stamina and strength, the Andalusian, courageous and powerful and the Spanish Jennet, a lighter breed of horse, possessing a comfortable saddle gait that would allow settlers to travel greater distances without tiring.
As Spanish settlers came to the new world, they brought additional Spanish horses that would be selectively bred with the original foundation stock.
As the islands of the Americas were colonized, the selective breeding of the “Caballo de Criollo”, (native descendants from original stock) created similar yet unique strains of Paso horses for specific and diverse roles of exploration, conquest and settlement of the Caribbean and Latin America.  Initially in Puerto Rico and Colombia, the criollo became known as Paso Fino and Paso de Colombiano.  Later on, as exploration and trade increased, Cuba, the Dominican Republic, Venezuela and Aruba all bred regional strains of Paso horses.

In Puerto Rico it was Ponce de Leon, who in 1509 was responsible for bringing a number of those horses from the remount station.  These first arrivals included horses that performed an easy ambling gait. 
Owners blended these Spanish horses to create the first criollo (bred and born locally) horses of Puerto Rico, shaped by the environment and needs of the island’s settlers, with a preference towards a smooth natural gait.  The country grew and developed, and with it the criollo evolved to meet the demands of the people.
The selective breeding of the best criollo with future imported stock resulted in the foundation of a new breed of horse, the Paso Fino, named for the smooth natural gait that it performed.   Then towards the end of the 19th century, the noted breeding of extraordinary horses resulted in what would impact the future of the Pure Puerto Rican Paso Fino.  The Andalusian stallion Faraon was bred to the mare La Cora, resulting in Faraon II.  Faraon II was bred to La Vazquez producing Caramelo and Caramelo was then bred to Masqueada.  This final cross brought the breed Dulce Sueno, who truly exemplified the breed and set the standard by which the breed would be known.  Almost all Pure Puerto Rican Paso Fino horses are descendants of the sire, Dulce Sueno.  Breeding took on purpose and gave vision to the future of the breed. The breed came to be the national horse of Puerto Rico.

In Colombia, some thirty years later the Spanish horses were bred in semi isolation, and in different regions of the country.  The country is vast and differed greatly from the geography of Puerto Rico.  The Colombian criollo was bred to meet the demands of a rugged terrain, and to service settlers’ needs in conquering the challenges of early day colonization.
Again, the criollo was bred to create animals of necessity.  As life in Colombia progressed the passion of breeding the finest animals became a matter of pride for haciendas and families.  Lines often carried the name from the farm, a region or an extraordinary horse. 

By the mid 1940s American servicemen stationed in Puerto Rico discovered the smooth riding Paso Fino.
They not only grew to admire the breed, they recognized that it was unlike any other riding horse that existed back home.  A number of servicemen brought Paso Finos with them upon returning home after
World War II.
It was another two decades before Paso Finos were imported from Colombia, but word of this new breed was spreading and the demand was increasing quickly.  American breeders, still learning about the breed, had to deal with cultural differences, language barriers, distance and the cost of importation as they continued to import breeding stock.  No doubt all of these factors played roles in the selection of horses that arrived in North America. 
This has lead to a veritable melting pot, and just as in countries of origin, breeders began to selectively breed Paso Finos in North America.  This lead to a diverse selection of genetics within the breed, while still adhering to the breed standards set out by early associations and breeders in countries of origin.  And so began the creation of the Amerian Paso Fino Horse.

A historical video from Ramey Airforce Base - 1967 
(link to youtube video)