Coconut Plantation, East Point
(former main settlement)
Portuguese explorers were the first Europeans to discover the island of Diego Garcia. The island may have first been explored by the Portuguese navigator Pêro de Mascarenhas (1470–June 23, 1555) during his voyage of 1512–13, but there is little corroborative evidence for this, while cartographic analysis points to a subsequent date, possibly 1532 or later.

In addition considerable uncertainty exists regarding the origin of the name of Diego Garcia, particularly as no navigator of this name can be traced in contemporary records for this part of the world. He might be the same Diego Garcia who sailed to the Río de la Plata in 1526, and possibly with Hernando de Soto's voyage, but as a Spaniard it seems unlikely that he was ever in the Indian Ocean. In fact there is good reason to believe that the Christian name, Diego, of the island's discoverer was a misnomer or misreading which came into use towards the end of the sixteenth century. Although the Cantino Planisphere (1504) and the Ruysch map (1507) clearly delineate the Maldives, giving them the same names, they show no islands to the south which can be identified as the Chagos group.

The Sebastian Cabot map (Antwerp 1544) shows a number of islands to the south which may be the Mascarene group. The first map which identifies and names 'Los Chagos' (in about the right position) is that of Pierre Descelier (Dieppe 1550), although Diego Garcia is not named. An island called 'Don Garcia' appears on the Nova Totius Terrarum Orbis of Abraham Ortelius (Antwerp 1564), together with 'Dos Compagnos', slightly to the north. It may be the case that 'Don Garcia' was named after Garcia de Noronha, although there no evidence exists to support this supposition. The island is also shown as 'Don Garcia' on Mercator's Nova et Aucta Orbis Terrae Description (Duisburg 1569). However, on the Vera Totius Expeditionis Nauticae Description of Jodocus Hondius (London 1589), 'Don Garcia' mysteriously changes its name to 'I. de Dio Gratia', while the 'I. de Chagues' appears close by.

The first map to delineate the island under its present name, Diego Garcia, is the World Map of Edward Wright (London 1599), possibly as a result of misreading Dio (or simply 'D.') as Diego, and Gratia as Garcia. The Nova Totius Terrarum Orbis Geographica of Henricus Hondius (Antwerp 1630) repeats Wright's misreading of the name, which is then proliferated on all subsequent Dutch maps of the period, and to the present day.

The islands were uninhabited until the 18th century, when the French established coconut plantations using slave labour. Diego Garcia became a colony of the United Kingdom after the Napoleonic wars, and from 1814–1965 it was a dependency of Mauritius. In 1914, the island was visited by the German cruiser SMS Emden.

In 1965, the Chagos Archipelago, which include Diego Garcia, were detached from Mauritius to form part of the British Indian Ocean Territory (BIOT). In 1966 the crown bought the islands and plantations, which had been under private ownership and which had been unprofitable since the introduction of new oils and lubricants. In 1971, due to an agreement between the UK and the US, the plantations were closed, and the island made available to the US as a military base. No payment was made as part of this arrangement, although it has been claimed that the United Kingdom received a US$14M discount on the acquisition of Polaris missiles from the United States. The agreement forbids any other economic activity on the island.

Until 1971 Diego Garcia had a native population of two thousand Chagossians or Ilois, descendants of Indian workers and African slaves who had been brought to the island in the eighteenth and nineteenth centuries to work on the coconut and copra plantations. They lived in three settlements: East Point, the main settlement on the eastern rim of the atoll; Minni Minni, 4.5 kilometres (2.8 mi) north of East Point; and Pointe Marianne, on the western rim. The islands were forcibly depopulated by the UK, their residents moved to the Seychelles and then to Mauritius using controversial techniques. Since their expulsion the Chagossians have continually asserted their right to return to Diego Garcia. In April 2006, 102 Chagossians were allowed to visit Diego Garcia for a day, to tend to graves and visit their birthplaces. For a good general history of the Islands and what happened to the Ilois, refer to The Minority Rights Group Report No 54 - 'Diego Garcia: a contrast to the Falklands' or read the book by David Vine; Island of Shame: The Secret History of the U.S. Military Base on Diego Garcia.