It is located on the southeastern Dildo Arm of Trinity Bay about 100 kilometres (62 mi) west of St. John's.

[6] It was used as early as the 16th century for a cylindrical object such as a dildo glass (test tube), for a phallus-shaped sex toy, as an insult for a "contemptuous or reviling" male, and as a refrain in ballads.

Social scientist William Baillie Hamilton notes that Captain James Cook and his assistant Michael Lane, who mapped Newfoundland in the 1760s, often displayed a sense of humour in the place names they chose, and were not above selecting names that might "offend over-sensitive" readers.

[8] The Dildo area has a long history, going as far back as 2000 BC when Maritime Archaic aboriginal people resided at Anderson's Cove.

In 1711, during Queen Anne's War, the inhabitants of Trinity Bay were ordered by Governor Crow to leave their homes during the winter, to defend themselves against the French, who burned their houses.

The town of Dildo was founded in the late 18th century and settled to exploit the abundance of marine resources such as fish (mostly cod), whales and seals.

In addition, Guillermo Rodriguez, who is known as Kimmel's sidekick "security guard", was made an honorary citizen of Dildo through the Newfoundland tradition of 'screeching in,' on the August 15, 2019, broadcast of the show.