[4] Cauayan derives its name from the word Cawayan meaning bamboo or bulo in the Ilocano language, which was spoken by the early settlers of the area.

Local aural history suggests that early Spaniards reached the place and found abundant bamboo trees along creeks that circled the town sites of Bulod, Sipat, Bungkol, and Marabulig creeks where a few families lived - and so that became the name of the area.

It was also a common to see crocodiles basking under the cluster of bamboo along the creeks in the early morning sun [citation needed].

The original inhabitants (as recorded by the Dominican vicar of Ilagan, Father dela Torre, who explored the area in 1736) were Gaddang.

With the creation of the neighboring municipalities of Luna (Antatet) Cabatuan, Reina Mercedes (Callering), Aurora and San Mateo, however, the land area was reduced to about 336.40 square kilometers.

[8] On February 28, 2001, Republic Act 9017 was signed by then President Gloria Macapagal Arroyo, converting Cauayan into a component city.

[9] As of 2019, Cauayan is the only settlement in Isabela (and the second in the country after San Isidro, Bohol) to be covered by one district surrounded by another.

Cauayan has been selected to host the Proposed Isabela Special Economic Zone and the Regional Agro-Industrial Growth Center.

Corn farmers in the city are also shifting to cassava farming due to huge losses brought about by the effects of climate change in the province of Isabela.

[34][35] It also hosts stores from international and local brands, giving Cauayan and other neighboring towns and cities the opportunity to experience high-end shopping on a vibrant and elegant environment—and most notably is the Japanese clothing line Uniqlo.

Cauayan traces its roots to the people of Gaddang, whom the city celebrates during the annual festival of Gawagaway-yan.

This celebration features a street dance competition, a float parade and assorted activities that different ethno-linguistic groups participate in.

The old Tabacalera Warehouse is part of Hacienda San Luis,[39] an eco-tourism park in the city.

Aside from the majestic view of Cagayan river from the 250m long and 30 ft high zip line, Hacienda San Luis is a home for cultural heritage.

Museo San Luis features how tobaccos are made for the Manila-Acapulco galleon trade.

The national roads allow the operation of various bus and jeepney operators in the City of Cauayan and neighboring towns and areas to transport passengers and cargo to any point of Luzon, making the City of Cauayan one of the transport pivotal points in the Cagayan Valley.

The 18.16 kilometers of national roads in the City of Cauayan provide mobility and access to the neighboring towns, provinces and regions.

The proposed Cauayan Diversion Roads include the Minante I- Marabulig-I – Dadap (Mun.

of Luna) – San Fermin – Tagaran with an approximate length of 12..5 kilometers; the Alicaocao – Turayong – District II – Labinab – District I – Minante I Diversion Road (4.8 km); and the San Fermin – Tagaran via CRAIGC (4.2 km) These Diversion Roads when constructed will improve the settlements, the movement of goods and services and even the flow of traffic in the city.

The estimated construction cost for these tree (3) projects will reach PhP 119.5 million including drainage and 4 bridges.

In order for business to flourish in the poblacion, all city streets need to be concreted within the plan period.

The provision of heavy equipment necessary in the construction and maintenance of roads and other infrastructure facilities and utilities is of high importance in order for the city government to enhance mobility thereby increasing productivity.

Cauayan road network is supported with privately owned terminals for jeeps and buses located at Barangay San Fermin.

An inter-provincial bus terminal with an estimated cost of PHP 70.00 million needs to be constructed in this rapidly urbanizing city to improve the effectiveness and efficiency of the city's transportation system and to provide additional prime commercial area and needed tourism support services.

When completed, it is also expected that normal operations of the Philippine Airlines will resume which is very crucial in the commerce and industry sector of the city.

This is very timely since Cauayan has been selected to host the Proposed Isabela Special Economic Zone and the Regional Agro-Industrial Growth Center.

Cebu Pacific Air fly in Cauayan daily utilizing an Airbus A320 aircraft with Flight No.

[45] The Schools Division Office of Cauayan governs the city's public education system.