It is situated on a small plain set in a semicircle of mountain ranges and nestles in the northern mouth of the San Juanico Strait, which separates Samar from Leyte.

Small coconut covered islets fringe its coast along San Juanico Strait, the most important of which are Rizal, Magsaigad, Tabigue, almost all of which extend from east to west.

[citation needed] The place got its name from the word batong, a large trap made of abaca fibers used for hunting by the early Boholano settlers.

Another version says that the first settlement was San Vicente, which was part of Bacod Island, while still others say that the first municipal site was in the present barangay of Malibago.

One day, near the end of the year 1600, the Boholano traders were stranded in the present site of Babatngon because of unfavorable winds.

The town at the time was covered by thick forests from the shore to the uplands with undergrowth of pandans and guava trees.

The early Spaniards called the town "Babagnon" but the natives changed the original name into "Babatngon" for easier diction.

The expansion of the town was sparked by the establishment of a British trading post - called "Almacen" in Soledad street.

Soon after the trading post was organized, huge brick and adobe commercial houses were constructed across the street.

Immigrants from Japan, Carigara, Barugo, San Miguel and from the coastal towns of Western Samar and other countries flocked to Babatngon which had grown into a commercial district.

No sooner had the people recovered from the devastation when another war razed the school building, the town hall, recreational centers and countless residential houses to the ground.

During the Second World War, Mayor Melchor Cañete guided the townspeople through the difficulties of food shortage and unsettled times.

Mayor Cañete kept the peace in Babatngon so well during the Japanese occupation that the seat of provincial government was temporarily transferred to the town.