The design is most commonly credited to Ephraim Atkinson of Clark's Harbour, Nova Scotia.
The Atkinson family builders have continued building pleasure and commercial boats to this day.
The other claim to the boat's design is an accomplished boat-builder from Clark's Harbour, William A. Kenney, who is said to have constructed the first Cape Islander entirely from wood in 1905.
The Cape Sable and Pubnico area of South West Nova Scotia remain major centres of Cape Islander construction for the Atlantic region using newer materials, larger sizes (notably an increased beam) and more advanced equipment.
Beginning as an open motor-powered boat, Cape Islanders gradually evolved a covered wheelhouse called the "cuddy" which grew in size to provide bunks and a small galley space forward of the wheelhouse in the raised bow area.