Apalachicola is an Indian word for "Land Beyond" or "Those people residing on the other side." Other Indian dialects say it means "allies" or "Friendly People." There were once more than 40,000 Indians in this region, representing many tribes, before the Europeans discovered the area in the 1600s. The many shell mounds attest to the fact that the Indians were the first to develop the seafood industry.

The first white people were the Franciscan friars from Spain, who by 1655 had established about 10 missions in the Apalachee country. Early trade was in fur, as the hides brought rich profits in Europe. There was much competition between the Europeans for the trade and intrigue and fighting among the Europeans hindered early settlement of the area.

Settlement did come and in 1821, the area between Cape Florida and the Apalachicola River was declared a customs district, with St. Marks as the Port of Entry. As most business was on the Apalachicola, a Customs House was moved here in 1823. By the time Apalachicola was officially named and established in 1831, cotton was growing to be King. As a result, the river City of Apalachicola soon became the third largest port on the Gulf Coast. The hey day of Apalachicola lasted from 1829 to the Civil War. By 1837, there were two banks and by 1840, the population was more than 1,030. The waterfront was lined with brick warehouses and broad streets to handle the loading and unloading of the cotton. Steamboats coming down the river loaded with bales of cotton were common. Small lighters could be seen carrying cargo to the larger ships offshore.

The sponge industry, which emerged a few years later, was also an economic influence in Apalachicola Although the sponge industry in Apalachicola never reached the high in the industry that Key West and Tarpon Springs did, the industry was profitable enough to rank Apalachicola the third largest sponge producing area in the State. In 1888, the town did $21,000 worth of trading, employing abut 100 men. The town had two sponge warehouse exchanges; one of them, located on Avenue E, is still standing. At one time, Apalachicola featured a racetrack, the Mansion House which provided balls, socials and gambling, an opera house, a newspaper and many businesses lining Market Street.

On the eve of the Civil War, Apalachicola was the sixth largest town in Florida with 1,906 residents. The City of Apalachicola grew rapidly because of its location at the mouth of the river.

Apalachicola's boom period ended with the advent of the Civil War. The town was blockaded by the Yankees. There are several Confederate graves in the old Chestnut Street Cemetery.

The war and the coming of the railroads ended the river shipping activity, along with various industries associated with it. As a result, the economy shifted from shipping to harvesting of the area's natural resources - an industry which still is a strong component of the area's economy.