The first Europeans to find Nanaimo Bay were those of the 1791 Spanish voyage of Juan Carrasco, under the command of Francisco de Eliza. They gave it the name Bocas de Winthuysen.
Nanaimo began as a trading post in the early 19th century; in 1849 the Snuneymuxw chief Ki-et-sa-kun ("Coal Tyee") informed the Hudson’s Bay Company of the presence of coal in the area, and in 1853 the company built a fort known as the Nanaimo Bastion(still preserved). Subsequently the town was chiefly known for the export of coal.
Robert Dunsmuir helped establish coal mines in the Nanaimo harbour area as an employee of the Hudson's Bay Company, and later mined in Nanaimo as one of the first independent miners. In 1869 Dunsmuir discovered coal several miles North of Nanaimo at Wellington, and subsequently created the company Dunsmuir and Diggle Ltd so he could acquire crown land and finance the start-up of what became the Wellington Colliery. With the success of Dunsmuir and Diggle and the Wellington Colliery, Dunsmuir expanded his operations to include steam railways. Dunsmuir sold Wellington Coal through its Departure Bay docks, while competing Nanaimo coal was sold by the London-based Vancouver Coal Company through the Nanaimo docks.
The gassy qualities of the coal which made it valuable also made it dangerous. The 1887 Nanaimo Mine Explosion killed 150 miners and was described as the largest man-made explosion until the Halifax Explosion. Another 100 men died in another explosion the next year. In the 1940s, lumber supplanted coal as the main business although Mine town Days are still celebrated in the neighbouring community of Lantzville
