The Spanish first settled west of present-day Puerto Cortés early in the colonial era, recognizing the value of the fine natural harbor. The first settlement was named Puerto Caballos (Port of Horses), after conquistador Gil González Dávila was caught in a fierce storm nearby in 1524 and was forced to throw several horses overboard.

Puerto Caballos was repeatedly struck by epidemics and marauding pirates, and by the turn of the 17th century the Spanish relocated to the better-protected harbor of Omoa, to the west. Modern Puerto Cortés was established in 1869 on the other side of the bay from the old colonial port, at the terminus of a new railway line connecting San Pedro Sula to the coast.

In the late 19th century, Puerto Cortés was a favorite destination for all manner of shady characters, swindlers, and soldiers-of-fortune from the United States and Europe. Many were on the run from the law, as Honduras had no extradition treaties until 1912. For a time in the 1890s, the Louisiana Lottery, banned in its home state, found refuge in Puerto Cortés and became one of the largest gambling concerns in the world.