The Esselen, Salinan and Rumsen Ohlone Indians were the Monterey area's first inhabitants, living in small, semi-permanent villages. Spanish explorer Juan Rodriguez Cabrillo was the first European to enter the Monterey Bay, and although he did not land here, he claimed the land for Spain in 1542. In 1602, Sebastian Vizcaino arrived, naming the area "Monterey" in honor of Count de Monte Rey, viceroy of New Spain.

In 1770, Father Junipero Serra and Gaspar de Portola arrived. Portola established the Monterey presidio, and Serra founded California's second mission in nearby Carmel. In 1776, months Juan Bautista de Anza brought a party of 240-odd soldiers and settlers to Monterey, including many women and children.

Monterey was the regional capitol under Spanish and Mexican rule from 1777 to 1849, when California became part of the United States. It was the home of many California firsts, including the first theater, first brick house, public library and printing press.

In the late nineteenth century, whaling gave way to fishing, which lasted until the bay's abundant sardine schools succumbed to over-fishing in the 1950s and Monterey entered a period of decline. The Naval Postgraduate School moved into the old Hotel del Monte in 1951. The former canning factories along the coast have now been transformed into a tourist attraction, and in an ironic twist, the Monterey Bay Aquarium moved into the former Hovden Cannery in 1984.