The original name Banyalbahar comprises two different components, both of Arabic origin: banya (constructed) and bahar. Banya derives from the name of a Moorish settlement established on the island in the 10th century. The original meaning of Banyalbufar is, therefore, "founded by the sea".
Following the Catalan conquest of Majorca in 1229, Banyalbufar came under control of Gilabert de Cruilles and Ramon sa Clusa. During the Middle Ages and up until the 15th century, the valley was ruled under a practically absolutist government, the Barony of Banyalbufar. The baron maintained the civil and criminal jurisdiction over the entire population.
The inhabitants of Banyalbufar devoted themselves almost exclusively to agriculture. Fishing remained merely a secondary industry. Produce included wheat, barley, pulses, olives, flax, hemp, saffron and, above all, wine. The local Malvasier grape was highly prized. After a long period of decline, there are now efforts to revive this fruit.