During the past century, it was known as "Punta Escondida" (Hidden Point), which at the time, was just a small fishing village with an important commercial port from which aromatic coffee and precious wood was shipped. When commercial activities started fading, it became a fishing village again. It was not until the thirties that this settlement became a real town. The name was changed from "Punta Escondida" to "Puerto Escondido" ( Hidden Port ).

During the sixties, Puerto Escondido was aided greatly by the construction of a highway leading to Acapulco . Tourism started to flourish, due mostly to its quiet nature and beautiful beaches, gently bathed by the Pacific Ocean.

With time, tourism has increased, foreigners for the most part, and a handful of adventurous Oaxacan youngsters have been visiting Puerto Escondido, despite the rough roads that led from the capital city to this beach site. The present roads are paved and in good shape. Through the years, hotels and resorts were constructed. The beach palapas (large, palm-thatched, umbrella-shaped beach shelters), where fishermen offered exquisite sea food specialties, have been disappearing, giving way to modern tourist developments. Currently, Puerto Escondido is one of the most important tourist sites on the Oaxacan Coast.