In antiquity, the island was named "Euonymus"; the nearby islet of Basiluzzo, administered from Panarea, was named "Hycesia". There is archaeological evidence on the island dating back to Mycenaean inhabitants (~ 1200 BCE), and the island was settled by Romans. There were people still living on the island until pirates and other Mediterranean raiders made life unbearable after the Fall of Rome.
In modern times, Panarea has become a fashionable vacation spot. In 2011, it was described by W magazine as "the epicenter of the chicest summer scene in the Mediterranean."
Panarea and the entire Aeolian chain were declared a UNESCO World Heritage site in 2000. Largely because of this, construction and development are strictly regulated and the community retains its storied insularity. Most residences admit only temporary occupancy, and the few year-round homes available are highly expensive and difficult to obtain