During the 13th and 14th century, one of the bases for the German Order in Livonia, was the town of Perona, situated on the shores of the river of the same name. In 1263, when Perona was pillaged and burnt down by the Lithuanians, the local citizens began to move to the shore opposite the estuary of Pärnu river. The German Order built their fortification there and established command. The Uus-Pärnu (New-Pärnu) town was established on the 5th April 1265, with the privilege of the Livonian master of the German Order. The location was chosen due to its convenient access by sea.

Uus-Pärnu was one of the five Estonian towns surrounded by wall. The others were Tallinn, Tartu, Narva and Viljandi. The town back then was probably only 5 hectares, which made Uus-Pärnu one of the biggest towns in Livonia. In the 16th century, there were around 600 inhabitants and including the suburbs, around 1100 inhabitants. The heart of Uus-Pärnu was the market-place (1), located in the centre of the town. The St. Nicholas church (2), along with the chapel of the Holy Cross, was located on the east side of the town; the town hall and the weighing room were located on the north side. The main street covered the route from the south to the north and ran through the market-place and the town church to the Riga Gate (3), where the road along the beach led to Riga.  
 
The people entering through the city gates experienced a completely different world where their lives were organised by certain rules, regulations and freedoms based on the city laws. Gambling was forbidden in the town. The town was burnt down several times, therefore the locals were given strict instructions about fire safety: "Everyone has to keep an eye on their fire or trouble will arise" (Bursprake). Outside the city walls, the rules were less strict: "If anybody gets caught in another man’s garden, no matter what their business there was, they will not be punished" (Bursprake).
The two border towns, Vana-Pärnu (Old-Pärnu) and Uus-Pärnu (New-Pärnu) were competing in merchandising. Vana-Pärnu, which was not a member of the Hanseatic League, had to make an extra effort. Citizens were not allowed to trade money, salt or any other goods with the people from Uus-Pärnu. A ferryman, who worked under Episcopal license, led travel between the two towns.

The Hanseatic League (from 13th to 17th centuries) was an alliance between a hundred cities, which were predominantly Northern-German cities such as Lubeck and Hamburg. From the mid 14th century, the Hanseatic League can be considered a trading and political union with a fixed structure, management and goals. All the full members were given common rights but at the same time, some of the members and areas were privileged enough to have special rights. One of the main obligations of the Hanseatic League was to guarantee safety on land and on sea. The league also helped to develop the field of fine arts and spread handicraft skills in the Scandinavian and Livonian cities. It promoted the Reformation, influenced the development of literacy and helped to establish Rostock University. The Estonian medieval cities that were members of the league included Tartu, Tallinn, Uus-Pärnu and Viljandi. Narva, which had an excellent geographical and commercial location, was left out after opposition by Tallinn. Pärnu was an important port, where goods, mostly from Luebeck, were brought. The most popular import goods were baize, beer, hops, salt, linen textiles, herrings, dried cod and various wines. The goods shipped to Luebeck were mostly linen (92,5% out of the gross value of the export from Pärnu), rye, ashes, tar, seal-oil, buckhorns, hemp and birch bark. At the parliament meeting of the Livonian cities, in 1541, the ambassadors from Riga, Tallinn and Tartu complained about the illicit trade in Uus-Pärnu. They stated that several forbidden goods, such as barley, malt and linseeds, were being exported from Pärnu. The countries were expanding and the routes were relegated which made the Hanseatic League less popular. It finally collapsed during the Thirty Years' War (1616-1648).