Cayey was founded on August 17, 1773 by Juan Mata V�zquez, who became its first mayor. It is said that Cayey derives its name from the Taino Indian word for "a place of waters". Its original name was "Cayey de Muesas".
During 1880, a fire that later acquired legendary status took place in Cayey's Mirador Echevarria area. The fire broke out on the property of a timber company near Charca Del Pato. Many people and dogs died, and legend has it that the dogs' barking can still be heard, and sometimes, at night, the screams of the men who burned to death can still be heard too.
During the first half of the 20th century, Cayey was basically an agricultural area of small farmers and local haciendas dedicated to the farming of crops for the local market. During the 1920s and 1930s farmers increasingly lost their land to absentee landowners, mostly American companies, that turned to the cultivation of sugar cane and, to a lesser extent, tobacco for export. In the 1950s and 1960s some manufacturing concerns established plants in Cayey taking advantage of tax incentives offered by "Operation Bootstrap", Puerto Rico's industrialization program. Among the most notable were the "Consolidated Cigars", making cigars, and what was locally known as "La Gordon", a textile plant. These plants created hundreds of manufacturing jobs, mostly for women, and created a housing boom. In the 1960s new housing developments, like "Reparto Montellano", provided new housing for Cayey's increasing population outside of the town proper. By that time, however, you could still see vast sugarcane fields in the "Montellano" area of Cayey and the "Central" where the sugarcane was processed. You could likewise see barns dotting the mountainsides where tobacco was hung to dry. In 1967 the University of Puerto Rico opened a campus in Cayey at the old "Henry Barracks", an abandoned WWI U.S. Army base. In the early 1970s PR-52 was completed connecting the North and South coastal areas of Puerto
