When the first European explorers arrived in the region, the Yuman People inhabited the region, of which tribal groups such as the Kiliwa, Paipai and Kumeyaay still exist. These semi-nomadic indigenous people lived in the bay area and interior valleys of the Sierra de Juárez and San Pedro Mártir.
Bahia Todos Santos, which Ensenada now borders, was first reached by sea by the Spanish explorer Juan Rodríguez Cabrillo on the vessels El Salvador and Victoria. The city was founded September 17, 1542 under the name San Mateo. In 1602, while mapping the coast of the Californias in search of safe harbors for returning Spanish galleons from Manila to Acapulco, Sebastián Vizcaíno renamed the city to Ensenada de Todos Santos. Ensenada means "bay" or "cove".
The first permanent settlement was established by the Jesuits during the 17th or 18th century. After the expulsion of the Jesuits in 1768, the Dominicans took over the representation of Europe in what is now Ensenada. In 1805,
José Manuel Ruiz Carillo obtained permission to establish himself in Ensenada, being appointed governor of Baja California and building in Ensenada a house that survived until the final part of that century, despite being briefly taken by William Walker, the self-declared "president" of the Republic of Lower California, in 1853–54.
In 1882, Ensenada was designated the capital of Baja California, and attempts at developing the area were made by the English
Mexican Land and Colonization Company. These were interrupted by the Mexican Revolution, which left the area devastated. In 1915, the capital was transferred to Mexicali, and in 1930 the population of Ensenada was only 5,000. During the early part of the twentieth century, the city's name was shortened from Ensenada de Todos Santos to Ensenada, a change made in order to avoid confusion with Todos Santos in Baja California Sur.
The twentieth-century development of Ensenada was assisted by prohibition, which sent Americans and Canadians south of their border in search of entertainment and alcohol, developing first Tijuana, then Rosarito, and finally Ensenada as tourist destinations. The Hotel Riviera del Pacífico was opened in 1930, briefly placing Ensenada on the international glamor map and was visited several times by President Miguel Aleman, international artists and political personalities; yet unlike the Hotel del Coronado, it was never a sustained success (despite giving rise to the claim that the Margarita was invented there). It really flourished only in the early 1950s, at which time Ensenada's population had risen to 20,000. The hotel finally closed in 1964. It was later reopened as a cultural center and museum. By this time, other hotels had opened, and the population and economy of Ensenada had grown and diversified towards their present status.
On January 26 of 2007 Pope Benedict XVI created the Diocese of Ensenada with territory taken from the Archdiocese of Tijuana and Mexicali Diocese, making it a suffragan of the Metropolitan Church of Tijuana.