Exactly how Belize came by its name is something of a mystery; it could be a corruption of the name Wallace, a Scotsman and probably a pirate, reputed to have settled here in 1620. Those preferring a more ancient origin believe the name to be derived from beliz , a Maya word meaning "muddy", or from the Maya term belekin , meaning "towards the east".

What is known is that by the late seventeenth century, buccaneers were cutting logwood (used for textile dyes in Europe) in the region, and had settled in a mangrove swamp consolidated with wood chips, loose coral and rum bottles at the mouth of today's Haulover Creek. The settlement became known as Belize Town , and by the 1700s it was well established as a centre for logwood cutters, their families and their slaves. The seafront contained the houses of the Baymen , as the settlers called themselves; the slaves lived in cabins on the south side of Haulover Creek, with various tribal groups occupying separate areas. After the rains had floated the logs downriver the men returned here to drink and brawl, with riotous Christmas celebrations going on for weeks.

Spain was the dominant colonial power in the region, and mounted several expeditions aimed at demonstrating control over the territory. These raids continued until the Battle of St George's Caye in 1798, when the settlers achieved victory with British naval help - a success that reinforced the bond with the British government. The nineteenth century saw the increasing influence of British expatriates , with colonial-style wooden housing dominating the shoreline as the "Scots clique" began to clean up the town's image and take control of its administration. Despite fires and epidemics in the nineteenth century the town and settlement grew with immigration from the West Indies and refugees from the Caste Wars in the Yucatán. In 1862 Belize became the colony of British Honduras , with Belize City as the administrative centre, and in 1871 Belize was officially declared a Crown Colony, with a resident governor appointed by Britain.

On September 10, 1931, the city was celebrating the anniversary of the Battle of St George's Caye when it was hit by a massive hurricane that uprooted houses, flooded the entire city and killed about a thousand people - ten percent of the population. Disaster relief was slow to arrive and many parts of the city were left in a state of squalid poverty. In 1961 the city was again ravaged by a hurricane: 262 people died, and the damage was so serious that plans were made to relocate the capital inland to Belmopan. (Hattieville, on the Western Highway, began life as a refuge for those fleeing the hurricane.) The official attitude was that Belize City would soon become a redundant backwater as Belmopan grew, but in fact few people chose to leave for the sterile "new town" atmosphere of Belmopan, and Belize City remains by far the most populous place in the country. Since independence the rise of foreign investment and tourism has made an impact, and Belize City is now experiencing a major construction boom.