The name Negril is a shortened version of Negrillo (Spanish: Little black ones), as it was originally named by the Spanish in 1494. The name is thought by some to be a reference to the black cliffs south of the village. Another theory holds that because there was a vast population of black eels along Negril's coast, the Spaniards called the area Negro Eels which was shortened to Negrillo and then to Negril. Although Negril has a long history, it did not become well known until the second half of the twentieth century.

Negril's development as a resort location began during the late 1950s, though access to the area proved difficult as ferries were required to drop off passengers in Negril Bay, forcing them to wade to shore. Most vacationers would rent rooms inside the homes of Jamaican families, or would pitch tents in their yards. Daniel Connell was the first person to create more traditional vacation lodging for these "flower children" when he set up the first guest house in Negril - Palm Grove. The area's welcoming and hospitable reputation grew over time and the first of many resorts was constructed in the mid to late 1960s. The first hotel in Negril was the Yacht Club by Mary's Bay on the West End.