Another legend holds that a Spanish friar from the eastern coasts of Mindanao came to the place, bringing with him a statue of Saint James the Apostle, patron of his native Santiago de Compostela in Spain.

Its development started before World War II, when the area was still a forest and the only inhabitants were indigenous Mandayas who chose to settle along the Agusan River.

Before the outbreak of World War II, the area in what is now the province which the town of Compostela currently belongs was one of the Bureau of Non-Christian Tribes for Mindanao.

Its office was based at Dansalan, Lanao under the directorship of Teofisto Guingona, Sr., who was then exercising government control over provinces and municipal districts of Mindanao.

Road construction of the Davao-Agusan National Highway extended up to Camp Kalaw, a Philippine Constabulary detachment located at what is now the town of Monkayo.

Settlers from Luzon and the Visayas started to settle in Compostela, lured by a promise of vast agricultural lands so fertile and rich if you are determined and able-bodied.

That was in 1939 and some of those who came to settle in Compostela to tame the wilderness are the Garcia's of Talibon, Bohol; the Galenzoga's of Baybay, Leyte; the Maquilan's of Mandawe, Cebu; the Regaña's of Samar; the Estrada's of Luzon and the Bayubay's of Ilocos.

These pioneers lived in harmony with the native Mandayas; among them were the Blanco's, the Manzanares', the Braose's, the Adao's and the Fabian's.

When World War II in the country broke out in 1942, most of the people evacuated to hinterlands of the valley leaving their farms behind.

Also during these times, Governor Antonio Lanzar appointed Mr. Formoso Piansay as Municipal District Mayor of Compostela.

156 was signed by then President Elpidio Quirino, organizing into four regular municipalities under the names of Compostela, New Leyte, Gov.

In the same year the sitios of Kao, Magkagong, Margosan, Matilo, Magangit, Cabacungan, Tigbatinao and Camanlangan were constituted into a barrio known as Santo Niño.

[7] At the time, Compostela was an incongruous mixture of wooden-roofed houses concentrated along the Agusan River which was properly known as "dungguanan" (embarkation).

By virtue of Executive Order 156 issued by President Elpidio Quirino, Compostela officially became a municipality on August 1, 1948.

Also, cavendish bananas are produced here by the Ayala Conglomerate and Multi-National Dole (Stanfilco), Philippines, Incorporated.