Exactly when Spaniard's Bay was first settled is unknown. However, the harbour was likely being frequented by migratory fishing crews as early as the first half of the sixteenth century. By at least the 1770's Spaniard's Bay was settled by fishermen from the English west country and American traders were making frequent visits to exchange salt, rum and tobacco for local salt fish.

By 1805 the population of Spaniard's Bay had risen to about 400. Some of the family names listed for that year include: Seymour, Vokey, Butt, Baggs, Baker, Menchion, Peddle, Kelly, Neil, Besom, Brown, Foster and Phelan. Throughout of the nineteenth century most of the population was engaged in the Labrador fishery, although some were also involved in the fishery off Cape St. Mary's.