The origins of Mondariz-Balneario date back to 1873, when the Peinador brothers started the commercial exploitation of the springs of Gándara and Troncoso. That was a period of growth, not only because of the commercialization of bottled water, but also because it became a perfect place for leisure and well-being. At that time, two buildings were inaugurated: the Casa dos Baños, in 1880, and the Gran Hotel, in 1098, the latter being the centrepiece of the thermal facilities of the island during the first decades of the 20th century.
Aristocrats, politicians, artists and renowned businesspersons would gather, during the waters season, in this small village which boasted an important hotel and offered accommodation to guests of different socio-economic status. Leading architects of the time, as Antonio Palacios and Jenaro de la Fuente, worked in the construction of the buildings which would turn Mondariz-Balneario into the top-ranked thermal village. Some special features as the fact of having their own currency and newspaper, and its importance for the European hydrotherapy originated today's municipality, which became independent from the town of Mondariz in 1924. Later, the town was conferred the title of "Muy Hospitalaria Villa" (Very hospitable place) by the king Alfonso XIII.
When the Spanish Civil War broke out, the village went into a decline, which reached its peak after a fire destroyed the hotel in 1973. In the 1990s, Mondariz-Balneario revived thanks to a daring and complete offer of thermal and hotel services.