According to archaeologists, Folegandros has been inhabited since 3000 BC, while its first inhabitants were probably the Kares. The island is said to have gotten its name from Folegandros, the son of Minoas, when the Cretan colony was founded here.

Records show that Folegandros paid a "submission tax" to Athens in the fifth century B.C., without belonging to the Athenian Alliance. Of course, Folegandros could not avoid the historical fate of the rest Cyclades and so it successively passed in Macedonian hands, Romans and Byzantines. During the Frankish, Folegandros initially passed into the hands of the Venetians, as part of the Duchy of Naxos. It was then that the Castle settlement was built, in order to protect the inhabitants against the frequent pirate raids. However, this measure was not enough and so piracy continued, with the island being almost deserted in 1566. Later on, it was occupied by the Turks. Actually, Tzanoum Pasha prove to be worst of all the raiding pirates, looting and destroying Folegandros.

With the 1821 Greek Revolution, Folegandros became a part of the newly-established Greek State.