According to findings, Leipsoi-Lipsi have been inhabited since antiquity. Archaeological excavations have brought to light fragments of pottery belonging to the Mycenaean era, while a part of a 4th century BC inscription has also been found, referring to the Ionians of Miletus. Some, based on the homophone between the names Lipsi and Calypso, attempt to identify the island with the residence of the legendary Calypso mentioned in Homer's Odyssey. However, no evidence to support this view has been found yet.

In 1088 AD a chrysobull by the Byzantine Emperor Alexios I, granted Lipsi, Patmos and the surrounding smaller islands to St. Christodoulos and the Monastery of John the Theologian. This golden bull survives to the present day in Patmos.

From 1522 on, Lipsi follow the fate of the rest Dodecanese and get under Ottoman occupation. When the Ottomans occupied the island in 1669, several Cretans left their island and some of them reached Lipsi and founded the settlement that exists today.

Lipsi island remained under Ottoman occupation until 1912, when together with the rest Dodecanese, it passed to the Italians. From 1948 on, it is a permanent part of the Greek State.