Craig Key was originally named Camp Panama, and was not a natural island, but a wide spot on the Overseas Railroad right-of-way.

The island's greatest claim to fame, however, is being the landfall site of the 1935 Labor Day Hurricane.

Captain Ivar Olsen, who had been taking refuge from the storm in his dry-docked boat near the island, recorded a barometer measurement of 26.35 inches of mercury (892 mbar), the lowest sea-level atmospheric pressure ever recorded on land.

The town was a total loss, but was rebuilt, and prospered as a vacation spot after the storm.

Originally a single island, two more man-made Keys were added, one to the southwest in 1955, and one to the northeast some time later.