The town was founded in 1779 by Francisco de Viedma, an explorer leading a Spanish expedition commissioned with colonizing Patagonia's shores.

In the 19th century, Carmen de Patagones had a fort, and after the May Revolution of 1810, it became a prison for royalists (Spaniards and pro-Spanish locals against the independence movement).

Later, during the Cisplatine War (1825–1828), the town became a naval base, since the main Argentine safe harbour, the estuary of the Río de la Plata, had been blocked by Brazilian ships.

The Brazilian troops attempted to take Carmen de Patagones, but they were repelled by armed residents on 7 March 1827; this date is still commemorated with a festival in the city.

Approved by the Congress in 1987, the plan was rescinded when Alfonsín's successor, President Carlos Menem, disbanded Entecap, the commission overseeing the project, in 1989.