Teruel was founded as a town in 1171 by King Alfonso the II, following the Arabic occupation of Valencia. This new Christian establishment links Valencia and the already conquered territories in Aragón.
However, when the town was founded the king Alfonso the II had a big problem so nobody wanted to live here. Because our winter is very very cold! and they could be attacked by Muslims, therefore in 1176, King Alfonso the II had to promulgate a document (Fuero de Teruel). It was a joint of privileges which was particularly advantegeous for the new settlers; so Jews, Muslims and Christians coexisted in Teruel between the XIII and XIV century.
Also, in 1238 the King Jaime the I conquers Valencia. The kingdom of Aragón expands, allowing, in the process, Moors, Jews and Christians to live together for economic and demographic reasons.
And in 1347 Teruel was given the title of city by the King Pedro the IV.