Long before Spanish colonization, the region had already been visited for a long time by Chinese and Asian traders, as evidenced by archaeological discoveries of porcelain and trade goods from the Tang, Song and Ming dynasties.
PAnglao prospered during the reign of the kingdom of Dapitan, but raids from the Moluccas and the conquest of Ternate led to periods of depopulation as its population fled mainly to Panay and Mindanao, including Dapitan.
During the Spanish rule, a Jesuit mission post was established, which in 1782 was formed into a parish, known as La Iglesia de San Agustin de Panglawod. In 1803, the town was officially incorporated as a municipality.
The Panglao watchtower was built in 1851. The 5-story octagonal tower is the tallest of its kind in the Philippines, but suffers from a lack of maintenance.