A small fishing community was settled in the late 18th century by fishermen and trappers from nearby settlements such as Greenspond and Bonavista.
The inhabitants made their living through small-boat inshore cod fishery, catching capelin, and participating in the seal hunt.
However, with an already fluctuating population, a decline in the inshore fishery and changes brought on by salt and fresh-frozen processing resulted in the resettlement of the community.
[1] According to the 1836 Census, 98 of the 100 inhabitants at Cape Island belonged to the Church of England and two were Roman Catholic.
Nathanial Coster, the first resident Church of England minister in Greenspond, visited Cape Island in June 1831 and 1855.