The first findings of human inhabitance in Meganisi date back to the Neolithic Age.
Meganisi was known as Taphos or Tafias in ancient times and belonged to the so-called Tafia Islands. This name was taken from Taphos, who was the son of Poseidon and ruler of the region. Taphos ruled his subjects with wisdom, followed by his son Mentes. Numerous reports about Meganisi are found from antiquity, beginning with the ancient poet Homer (Iliad II, 652-630), they took part in the Trojan War with 40 ships, a number that confirms that the island in the time of the Homeric epics was a powerful naval power.
During the Bronze Age, it was the centre of a pirate tribe called Televoes, who was also called Tafioi by the ancient name of Meganisi and had dominated the surrounding sea.
Recent archaeological excavations in the southern part near Cape Kefali have uncovered an untouched Mycenaean tomb (1600–1100 BC) part of a larger organized Mycenaean colony with a city, citadel and cemetery, which may change the historical data of the wider area.
According to some Latin writers, the ancient island of Capria, the modern island of Capri in Italy, used to be the colony of the Taphians. The history of Meganisi had always been connected with the neighbouring Lefkada from the ancient times up to the present. From the 7th century BC until the Roman conquest in 197 BC, Meganisi was a Corinthian colony.
After the fall of Constantinople in 1204 to the Crusaders, the island was given to the Venetians, but soon it was included into the dominion of Epirus. The island came into the hands of the French in the year 1294 until 1479. Until the return of the Venetians in 1684, Meganisi along with Lefkada was into the hands of the Turks. The islands passed on to the hands of the French in the year 1797. A year later, the island fell under the Turkish-Russian rule. From 1807 to 1809 Meganisi was conquered by the imperial French only to fall in the hands of British in 1810.
During the Greek Revolution in 1821 against the Ottoman Empire, Meganisi was actively involved, as it was a refuge for major Greek Heroes, Theodoros Kolokotronis, Georgios Karaiskakis and Odysseus Androutsos. Meganisi is proud because is the birthplace of Demos Tselios (Demetrios Ferentinos) who was one of the most competent leaders of the 1821 Greek Revolution. There is also a well known traditional rebellious song under his name "Ghero Demo" (Spartachori, Meganisi 1785 - Agrinio 1854).
At the southwestern end is the famous Papanikolis Cave, with a depth of about thirty meters and a sandy beach inside, where it was one of the hiding places of the Greek submarine Papanikolis, during World War II.
Meganisi and Lefkada, as well as the rest of the Eptanisa, were united with Greece on the 21-05-1864 after the end of the British occupation.