Prior to the modern era the island was inhabited by people of the Gabrielino/Tongva tribe, who also lived in the area of Los Angeles, had villages near present day San Pedro and Playa del Rey, and who regularly traveled back and forth to Catalina for trade.

The first European to ever set foot on the island was the Portuguese explorer Juan Rodriguez Cabrillo, sailing for Spain. This happened on October 7, 1542. He claimed the island for Spain and christened it San Salvador. Another Spanish explorer, Sebastian Vizcaino, rediscovered the island on the eve of Saint Catherine's day in 1602. He renamed it Santa Catalina to honor the feast day of St. Catherine of Alexandria.

During the following 300 years, the island served as home or base of operation for all sorts of visitors, from Russian otter hunters to Spanish smugglers to Chinese pirates. Franciscan monks tried to build a mission there, but failed due to the lack of fresh water on the island.

Catalina Island experienced a brief period of gold rush in 1860s, but no gold was found, and ultimately those early mining attempts were abandoned. By the end of 19th century, the island was almost uninhabited except for a few cattle herders. At that time, its location just 20 miles from Los Angeles—the city that had reached the population of 50,000 in 1890 and was undergoing the period of enormous growth—was a major factor that contributed to the development of the island into a vacation destination. The sons of Phineas Banning bought the island in 1891 from the estate of James Lick and established the Santa Catalina Island Company to develop it as a resort