This article examines the emergence of local identity and language use in the British Overseas Territory of Gibraltar, from its annexation in 1704 to the present day. Contrary to popular opinion, it shows that the founding population of British Gibraltar was divided along racial and linguistic grounds, and only in the 19th century evolved into a cohesive Spanish-speaking community, before its subsequent development into the bilingual English- and Spanish-speaking society of the present day. Through the analysis of census data, reportage and colonial government records, the article shows that the Dynamic Model of Postcolonial English in Schneider (2007) aptly captures the spread of English knowledge on the Rock. The population's persistent attachment to its British identity, and its framing of Gibraltar English as a variety of British English, are however theoretically problematic. The article concludes that local identity and language use are dependent as much on the territory's relationship with Spain as the United Kingdom.