The earliest settlements in the Virgin Islands date back to about 1500 BC, though there's evidence of human habitation going back another thousand years. Three known groups of Indians predated European arrival: the Ciboneys, the Arawaks and the Caribs. The latter had only secured the islands a few decades before Columbus arrived in 1493 and disrupted them.

Columbus, perhaps feeling the lack of female company shipboard, called the islands Las Vírgenes in a somewhat obscure reference to St Ursula and her 11,000 virgins. The next 150 years were typified by unsuccessful attempts by the English, French, Spanish and the Knights of Malta to establish permanent settlements on the islands, punctuated by the naughty activities of pirates and buccaneers. In 1672, the Danish West India Company firmly established its presence on St Thomas and, in 1694, on St John. In 1733 the company purchased St Croix from the French, united all three islands under Danish rule and transformed the islands, then known as the Danish West Indies, into one of the major sugar producers in the region.

The sugar industry was entirely dependant on slavery and the largest slave auctions in the world took place in Charlotte Amalie on St Thomas. In 1797, 25,500 slaves out of a total population of 30,000 worked on the islands. After emancipation in 1848, higher labor costs combined with drought, hurricane and an increase in beet sugar supplies from US and European growers to bring about the decline of the Danish West Indies.

The US first recognized the strategic importance of the islands' fortresses and deep-water harbors during the American Civil War, but the senate failed to approve a 7500000.00 purchase of St Thomas and St John from Denmark.

At the outbreak of WWI, when the islands became critical to US control of the Caribbean basin and the Panama Canal, the purchase was finally consummated for 25000000.00 in gold, the highest price the US had ever paid for land.

The US Virgin Islands remained under the jurisdiction of the US Navy for the next 14 years, when the US Department of the Interior assumed responsibility for them. Citizenship was granted to the populace in 1927, and four years later the Navy Department ceded administrative powers of the islands over the Department of the Interior. The Organic Act of 1954 allowed for the creation of a senate, and the political process evolved along the lines of the US model, with the Democratic and Republican parties dominating political discourse. Home rule was granted in 1970 and today the islands are an unincorporated territory under the US flag. In the 1950s and 60s, inexpensive air travel and the US embargo against Cuba brought an influx of tourists to the area, significantly altering the basis of the islands' economy.

Tourism remains the most dominant feature of the islands, and development of infrastructure continues. Despite their prominence in Caribbean tourist brochures, the islands only seem to come to international attention when a hurricane wreaks havoc, Hurricane Hugo did in 1989 and Hurricanes Luis and Marilyn did all over again in 1995.

The offshore banking industry was put under the microscope when in 2000 an OECD report included the US Virgin Islands on a list of countries and territories whose laws were conducive to money laundering. The tourist industry remained strong, particularly in relation to cruise ships. Cruise ship passenger arrivals numbered 1.7 million in 2003.