A little village on a hill overlooking Penn Cove, the site once had a pea cannery and a small sawmill. The farm of R. B. Holbrook, who settled here early in the 1850s, was purchased for a townsite, and San De Fuca (a contraction of San Juan and Juan de Fuca) boomed in the nineties as the east end of a proposed canal to bisect the island.

The town was named by a real estate syndicate composed of H. C. Power, L. H. Griffiths, and J. W. Gillespie in 1889. These promoters used a shortened version of San Juan de Fuca. The town was promoted as the east entrance of a cross-island canal which was never dug.