The town was founded in 1504 by Diego Velázquez, who later went to conquest the island of Cuba, on the left side of the River Artibonite.

In the 18th century, the Spanish government moved the city to its present place, away from the river, and brought families from the Canary Islands to live there.

[4] After the Independence in 1844, the town was elevated by the Dominican government to the category of municipality of the Azua province.

After the "Restoration War" (1863–1865), some families from other towns close to the Haitian border came to live in Bánica.

Bánica was the first place where Dominican President Rafael Trujillo implemented his campaign against the Haitians, later known as the Parsley Massacre.