San Salvador is believed to be where Christoper Columbus first landed in the Bahamas. The native Lucayan Indians called the island Guanahani, but when Columbus landed he claimed the land for Spain and changed the name to San Salvador.

During the 17th century, a pirate named George Watling changed the island's name to Watling's Island, but the Bahamian government changed it back to San Salvador in 1926. The ruins of Watling's Castle is near Sandy Point.