The area was first settled by the San Dieguitos, early Holocene inhabitants of the area. During the Spanish colonial era, trails heading north near Solana Beach crossed inland to avoid the marshes and inlets of the area. The George H. Jones family were the first settlers in the area now known as Solana Beach, arriving in 1886. Until 1923, the main area known as Solana Beach had been called Lockwood Mesa. When Lake Hodges Dam was built in 1917-18, the area encompassing Solana Beach began to develop rapidly. The creation of the Santa Fe Irrigation District in 1918 ensured that the area from Rancho Santa Fe through Solana Beach would prosper and expand. The coastline from Solana Beach to Oceanside began to boom in the early 1920s. In 1922 Colonel Ed Fletcher, an early community leader and developer, purchased at $20 per acre from farmer George H. Jones to develop the town of Solana Beach, with the help of his brother-in-law Eugene Batchelder. To provide access to the beach for the development, hydraulic water pressure was used to erode away tons of earth and create the Fletcher Cove entry and beach. This took one man three months with a fire hose, using water that was coming over the spillway at Lake Hodges Dam. The beach was opened with great fanfare including horse races on the beach on July 4, 1925.
The community grew slowly, but steadily throughout the rest of the century, with particular booms occurring in the decade after World War II and a real estate boom in the last quarter of the 20th century. In 1986 the community officially incorporated as the city of Solana Beach. That year, the city hosted the final funeral services for Desi Arnaz, who had died in Del Mar. Arnaz's funeral was held at St. James Roman Catholic Church, the only Catholic church in the city and part of the Diocese of San Diego.
While still a relatively tranquil coastal town, the city received national news in 2003 upon becoming the first city in the Continental United States to enact a smoking ban on its public beaches, a trend which has continued as many other coastal Californian towns have followed suit in banning smoking on their beaches. Solana Beach was the last coastal community in North San Diego County to ban alcohol on the beach, doing so for at least a year in an action unanimously approved by the City Council.
Solana Beach returned to the national spotlight on April 25, 2008 when retired veterinarian and 38-year resident Dr. David Martin, 66 years old, suffered a fatal injury from an extremely rare great white shark bite while swimming with a group approximately off shore near Solana Beach's Fletcher Cove. The group of swimmers reportedly began their swim at Tide Beach Park to the north. Surfers in the area of Fletcher Cover noted harbor seals in the water and a wounded seal on the beach at Fletcher Cove just before the attack, the latter being a typical sign of sharks feeding in the area. Recent increases in the seal population along the Southern California coast — and the seals' tendency to swim in close proximity to human swimmers — is suspected to be contributing factors in the attack.
The neighborhood of Eden Gardens (also known as La Colonia), one of the oldest residential areas of Solana Beach, was a community formed in the 1920s by Mexican farmers who were hired by the owners of large ranches in Rancho Santa Fe. These farmers wanted their families nearby, hence the formation of La Colonia (the colony). The name Eden Gardens came later from a land developer who thought it would be a good marketing tool. Many residents still refer to the area as La Colonia. Famous residents include Chicano rapper Lil Rob and comedian Rene Sandoval who were born and raised in the community.