The early history of Kavaratti is interwoven with the broader history of the Lakshadweep archipelago. Oral traditions and folklore suggest that the islands were first settled by travelers from the Malabar Coast of present-day Kerala, possibly following a shipwreck during the reign of the Chera King Cheraman Perumal. In the 7th century, Arab traders and the legendary Saint Ubaidullah are believed to have introduced Islam to the islands, leading to the construction of several historic mosques in Kavaratti, including the famous Ujra Mosque.
Over the centuries, control of the island shifted between various regional powers. It was briefly skirmished over by the Portuguese in the 16th century before falling under the protection of the Ali Rajahs of Kannur (the Arakkal family). In 1787, the islanders, weary of oppressive Arakkal rule, pledged allegiance to Tipu Sultan of Mysore. Following Tipu Sultan's defeat in the Third Anglo-Mysore War in 1792, Kavaratti and the rest of the islands eventually came under British suzerainty.
After India's independence in 1947, the islands were organized into a Union Territory in 1956. For several years, the administration was run from Kozhikode (Calicut) on the mainland. In 1964, the administrative headquarters was officially shifted to Kavaratti, cementing its status as the capital and initiating a period of modern infrastructural and administrative development.