The Spanish gave the island the name Gran Bajamar, meaning "Great Shallows", and what the eventual name of the Bahamas islands as a whole is derived from. However, the Lucayan (pre-Columbian) name for the island was Bahama. Grand Bahama's existence for almost two centuries was largely governed by the nature of these "great shallows" - the coral reefs surrounding the island were treacherous, and repelled its Spanish claimants (who largely left it alone apart from infrequent en route stops by ships for provisions) while attracting pirates, who would lure ships onto the reefs where they would run aground and be plundered. The Spaniards took little interest in the island after enslaving the native Lucayan inhabitants.
The islands were claimed by Great Britain in 1670. Piracy continued to thrive for at least half a century after the British takeover, though the problem was eventually brought under control.
Grand Bahama remained relatively quiet until the mid-19th century, with only around 200-400 regular inhabitants in the capital, West End. In 1834, the towns of Pinder’s Point, Russell Town and Williams Town were established by former Bahamian slaves after slavery was abolished in the British empire. The island remained under-developed until a brief boom of economic activity during the American Civil War, when it was a center for blockade runners smuggling goods (mostly weaponry, sugar and cotton) to the Confederacy. A second brief smuggling boom occurred during the years of prohibition in the US.
By the mid-20th century, Grand Bahama's population numbered around 500 and the island was one of the least developed of the Bahamas' islands. However it finally gained a stable source of income when in 1955 a Virginian financier named Wallace Groves began redevelopment with the Bahamian government to build the city of Freeport under the Hawksbill Creek Agreement and create the Grand Bahama Port Authority. Soon after, the ambitious Edward St. George, with the financial help of Sir Jack Hayward, took the company to new frontiers. Seeing the success of Cuba as a tourist destination for wealthy Americans, St. George was eager to develop Grand Bahama in a similar vein. The city grew rapidly, with St. George adding a harbour, an airport soon after the city was founded, and the tourist center of Port Lucaya in 1962. Grand Bahama became the second most populous island in the Bahamas (over 50,000 in 2004).
Tourism is the mainstay of the island's economy. The resort area at Port Lucaya and visits by cruise ships provide the bulk of this activity. Grand Bahama's tourism sector is complemented by the BORCO oil bunkering facility owned by Buckeye, the South Riding Point oil storage and transhipment terminal owned by Statoil, and a transshipment/container port partly owned by Hong Kong conglomerate Hutchison Whampoa and the Grand Bahama Port Authority. There are also quarrying operations on the island and a large shipyard.
There are two airports on the island: Grand Bahama International Airport in Freeport, and West End Airport in West End. Grand Bahama International Airport is the larger of the two, and West End Airport is open sporadically for private aircraft only.
Grand Bahama is divided into three districts and seven town areas for administrative purposes. Each district is run by a Chief Councilor, and each town area or township is run by a Chairperson. As of 1996 Grand Bahama has three districts.
Elections are held every 5 years in Grand Bahama. The two principal parties are the Progressive Liberal Party and the Free National Movement.