Paraty was inhabited by the indigenous Guaianás when the Portuguese first arrived here in the 16th century. With the discovery of gold in Minas Gerais at the end of the 17th century, Paraty became an obligatory stopover between Rio de Janeiro and the mines, as it was the only point where the escarpment of the Serra do Mar could be scaled.

As gold poured from the interior, borne by the labor of thousands of African slaves, Paraty became a busy, important port, and wealthy Europeans built fine houses and churches. After the 1720s, a new road from Rio via the Serra dos Órgãos cut 15 days off the journey to Minas Gerais, and Paraty started to decline. In the 19th century, the local economy revived with the coffee boom, but until the mid-20th century the sea remained the only viable commercial route to Paraty. In 1954 a modern road was built through the steep Serra do Mar, passing the town of Cunha, 47km inland. Then in 1960 the coastal road from Rio, 253km away, was extended to Paraty and 330km beyond to São Paulo, ushering in a new era of tourism-based prosperity.