The village of Simonstown was given its name in 1687, when Governor Simon van der Stel visited the area. However it probably remained a small, informal settlement until 1743 when it was established as the official winter anchorage for ships of the Dutch East Indian Company. That same year it was chosen as the site for a magazine, hospital and barracks, and by the time a stone pier was built in the harbour in 1768, the shore facilities included a bakery, a butchery, a carpenter's shop and a smithy, as well as a residence for the Governor. Two small forts were built in 1794, although these proved ineffective when British troops landed in the bay the following year.
A whaling station was established in the bay in 1810, and although by that stage the village boasted some 40 houses, most were the summer residences of wealthy Capetonians. In 1827 the South African Missionary Society established a mission on the site.
In 1814 Simonstown became a naval base and in 1875 it was ceded to the British Admiralty as a naval station. The local economy received an enormous boost in 1899 as the result of the South African War, and by 1902 Simonstown had about 450 dwellings. Many local residents were employed either by the military or in the town's dockyard. In about 1900 construction was begun on a new naval dock for the port, and on 1 December 1890 the railway line from Kalk Bay reached Simonstown.