The name of microraion came from the indigenous and the first dwellers of the area the Circassians or Adyghe they preferred to call their selves. In the 14th-17th centuries, the area was dominated by one of the Adyghe tribes; the Shapsugs, and was a village within historical Circassia. After the end of Caucasian War and as a result of the Russian invasion over Circassia (during the period of 1817�1864) the Shapsugs who lived in the area were either killed in the Circassian Genocide or expelled to the Ottoman Empire (see Muhajir).
Russian settlements in the area began with a military outpost, which later grew into several villages. Those villages were first populated by the retired soldiers and thus carried the names of the corresponding military units, such as 1st regiment, 2nd regiment, and so forth. The soldiers were then joined by migrants from all over Russia, as well as by Armenians escaping from the Turkish repressions. Armenians built separate villages in the mountains near Dagomys and named them Nor Luys, Lower Armenian Hobzu, Upper-Armenian Loo, etc.
The most valuable land near the sea was purchased by the government officials, ministers, prominent landowners and bankers. A plot of 2,500 hectares and a cattle-breeding farm at the mouth of the river Dagomys was owned by the family of the Emperor Nicholas II of Russia. The associated peasants lived in a small settlement which later became the modern Dagomys. Only about 300 people lived there in the early 20th century. This royal settlement was managed by Prince Uspensky. The farm was profitable as it was selling part of its production at the market of Sochi, and the citizens considered it an honor to buy Emperor's products; a small part was also delivered to the emperor himself.
Some settlers attempted to grow tea, which was then an expensive, yet the most popular non-alcoholic beverage in Russia. The early attempts in the 1870s and 1880s failed because of the cold climate, and the first
