Surveyor Samuel D. Parr claimed a league of land extending 5 miles eastward from Point Bolivar and in 1838 became the area's first permanent settler. That year developers Archibald Wynn and William Lawrence purchased about 1000 acres of Parr's land and surveyed a townsite name Ismail (Ishmael). When the first post office was established in 1876 the community's name because Gabion. The community was renamed Port Bolivar in 1893.​

In 1896 developers L.P. Featherstone and Fox Winnie constructed a railroad line connection Point Bolivar to Galveston and Beaumont. Featherstone was instrumental in dredging a channel and building a wharf, where the first cargo ship landed in 1909. The town prospered and by 1911 contained a schoolhouse and a Methodist church. Business activity at the wharf continued to expand and Port Bolivar's economy surged.

Shipping worldwide slowed at the outset of World War I and use of the wharf declined. In 1915 the town and wharf were severely damaged by a storm and many facilities were never rebuilt. The community turned to commercial fishing and tourism to successfully revitalize its economy. Regular ferry service to the mainland, which began in 1930, continues today.