Unlike many Newfoundland coastal settlements, Bonavista was built on an open plain, not in a steep cove, and thus had room to expand to its current area of 31.5 km2 (12.2 sq mi).

John Cabot (Giovanni Caboto), a freelance Italian explorer, was contracted by England's Henry VII to find new lands, and a sea route to the Orient.

Cabot landed with "a crucifix and raised banners with the arms of the Holy Father and those of the King of England".

[4] The land was inhabited, as the expedition found a trail leading inland, a site where a fire had been, and "a stick half a yard long pierced at both ends, carved and painted with brazil".

Despite this Bonavista became one of the most important towns in Newfoundland due to its proximity to the rich fishing and sealing grounds to the north of the peninsula.

[8] Bonavista was a major commercial centre and the evidence for this is preserved at the Ryan Premises, a National Historic Site maintained by Parks Canada.

The proposal arose from concerns about the economic sustainability and administrative challenges of smaller municipalities in the region.