The city is known by two names, one in English (Rocky Point) and one in Spanish (Puerto Peñasco or “Rocky Port”). In 1826, retired Lt. Robert William Hale Hardy of the British Royal Fleet was sailing in this area searching for pearls and precious metals. He named the area Rocky Point and it was identified as Rocky Point on marine maps until Lázaro Cárdenas changed it to Puerto Punta Peñasco (Port Rocky Point). To simplify pronunciation, the English name lost the word “Port” and the Spanish name dropped “Punta”.

Prior to the 1920s, the area was just one of the safe harbors for wandering fisherman who worked the upper Gulf of California. During fishing seasons, fishermen from Guaymas, Bahía Kino, Puerto Libertad and Puerto Lobos began to come here to camp out. The main attraction for these fishermen was a fish called totoaba, which was fished not for its meat but its use in medicine. At this time the area was known as Punta de Piedra o Punta Peñasco. The name comes from a large quantity of solidified lava that hit the Gulf. Even as early as the 19th century, fishermen from Arizona came here. Since there was no source of drinking water, it was not settled permanently. The first residents are considered to be Victor Estrella, Benjamin Bustamante, Melquiades Palacio, Luis Mercado, Juan Mercado and Tecla Bustamante, the last considered to be the first permanent resident.

In the 1920s, John Stone from Ajo, Arizona came here to build a hotel/casino to take advantage of people coming over the border to escape Prohibition. He drilled a water well, and set up flight service from Phoenix and Tucson to bring in tourists to drink, gamble and fish. It is said that Al Capone frequented the place. The business did well until Stone and the locals began to quarrel. Stone burned down the hotel and blew up the water well before he left.

In the 1930s, under President Lázaro Cárdenas, a railroad was built to connect the Baja California to the rest of Mexico, passing by Puerto Peñasco. The town began to grow again, adding a police delegation in 1932, as a dependency of the nearby municipality of Sonoyta, even though the town was part of the municipality of Caborca. The railroad line created new population centers and the initial layout of the city and port of Puerto Peñasco was begun in the 1940s. During this same time shrimp fishing was having an impact on the local economy. In 1941, the village had 187 inhabitants who made a living by fishing or working for the Sonora-Baja California railway.

In 1952, Puerto Peñasco separated from the municipality of Caborca and comprised the localities of Sonoyta, Bahía La Choya, 21 de Marzo and Cuahtémoc. Sonoyta was the second largest population center at the time, but it had been a settlement since 1694 when Jesuit missionaries established a mission with the name of San Marcelo de Conoitac. In 1989, the municipality of Plutarco Elías Calles was split from Puerto Peñasco.

Until the 1990s, there had been little tourism here except for campers, fishermen and those looking to take advantage of Mexico’s legal drinking age of 18. The municipality’s pristine beaches with clear waters stretched for a hundred miles north or south with almost no development. The push to make Puerto Peñasco or Rocky Point a major tourism center was initiated in 1993, with the government joining with private investors to build condominiums and other facilities. The goal has been to take advantage of the area’s proximity to the United States and Arizonan’s preference to spend beach weekends here. Much of the inspiration for the effort came from the success of Cancun, which was nearly virgin beach before a government/private venture developed it. Another reason to look to tourism was the declining catches of fishermen here, due to overfishing and pollution. The federal government contributed two billion pesos in infrastructure, especially roadways and an airport and the area was declared a free zone, meaning foreigners could visit the area without a visa. One of the first condo/hotel complexes to be built was Plaza Las Glorias in the early 1990s. More condos and hotels, as well as restaurants, supermarkets and bars began to appear.

The new highway shortens the drive from California by 100 miles After fishing, tourism is the most important economic activity for the city.