A trading post called Cottonton was located on the current site of Apalachicola. In 1827, the town was incorporated as West Point. Apalachicola received its current name in 1831, by an Act of the Legislative Council of the Territory of Florida.

Before the development of railways in the Gulf states, Apalachicola was the third busiest port in the Gulf of Mexico (behind New Orleans and Mobile). In the late 1800s and early 1900s, the sponge trade, led by Greek immigrants, was a major industry in the town. Apalachicola is still the home port for a variety of seafood workers, including oyster harvesters and shrimpers. More than 90% of Florida's oyster production is harvested from Apalachicola Bay. Every year the town hosts the Florida Seafood Festival. The bay is well protected by St. Vincent Island, Flag, Sand, St. George Island, and Cape St. George Island.

Trinity Episcopal Church was incorporated by an Act of the Legislative Council of the Territory of Florida on Feb 11, 1837. The builiding was one of the earliest prefabricated buildings in America. The framework was shipped by schooner from New York and assembled in Apalachicola with wooden pegs.

Botanist Alvan Wentworth Chapman (1809-1899) settled in Apalachicola in 1846. In 1860, he published his major work, Flora of the Southern United States. The local elementary school is named in his honor.

In 1849, Apalachicola physician Dr. John Gorrie (1802-1855) discovered the cold-air process of refrigeration and patented an ice-machine in 1850, as the result of experiments to lower the temperatures of fever patients, laying the groundwork for modern refrigeration and air-conditioning. The city has a monument to him, and a replica of his ice machine is on display in the John Gorrie Museum.

The AN Railway, formerly the Apalachicola Northern Railroad, serves the city.