According to records from 1715 made by the priest Polycarp Dufoo, the name comes from the Guaraní expression, "yaguarí guazú", which would mean "big-water river".

From the 17th century, Spanish representatives from Santa Fe and Buenos Aires gave possession of these lands to settlers who founded precarious rural settlements in constant dispute with the native tribes.

In the final decades of the century, the number of people scattered throughout the area from Buenos Aires and Santa Fe, including Jesuit missionaries, increased.

In December 1777 the rancher Esteban Justo García de Zúñiga was appointed as the “commander of the parties of Gualeguaychú, Gualeguay and Uruguay".

When he arrived at the town Rocamora noticed that the place where the first settlement had been established was low and prone to flooding, so he decided to move it to the north, in front of Libertad Island.

These factors as well as a port and Gualeguaychú's railway station caused the city to expand well beyond the capital square (now called Plaza de San Martín).

For years, the local residents had warned about the proposed installation of two large cellulose processing plants, called Botnia, near Fray Bentos, which would allegedly pollute the river.

Further blockades, sometimes lasting weeks, continued in 2006, seriously damaging the tourist season of Uruguay and causing major inconveniences to international trade.

The ecological cause of Gualeguaychú jumped to the national scene and the conflict escalated, leading to diplomatic and legal battles including an accusation before the International Court of Justice.

The Carnival has five comparsas (a group of people that represents a club or a social centre) which are called Mari–Mari, Papelitos, Ara-Yeví, Kamar and O’Bahia.

Liberty Island in the Gualeguaychù river in front of the city was where Justo José de Urquiza organized the “Big Army”.

Méndez Casariego Bridge crosses the Gualeguaychú river to the Park Unzué and Pueblo General Belgrano, and the nature reserve "Las Piedras".

People of historical note from Gualeguaychú include Juan José Nágera (the father of the geology in Argentina), Julio Irazusta (historian), Manuel Almeida (archaeologist), Maria Luisa Guerra and Juan Manuel Gavazzo (pianists), Buchan, Juan Carlos Guastavino, Carlos Delgado Roustan (painters), Angel Vicente Méndez Gervasio Aráoz and Olegario Victor Andrade (poets) and Fray Mocho and Luis N. Palma (writers).

Current people of note from the city include Héctor Luis Castillo, Luis Lujan, Zulma Nicolini and Carla Olivera (writers), Oscar Eduardo Ayala and Rebora (sculptors), Albanese Raul Alberto Bonus Chesini Paula and Maria Ines Lopez (painters).

Famous Gualeguaychuenses now living outside the city include Pedro Luis Barcia (President of the National Academy of Letters), Ramiro Cazaux (set designer), the dancer Florencia Chinelatto (who is part of the Hamburg Ballet), Luisa Delfino (journalist), Gervasio Larrivey (theatrical makeup), Vanesa Martinelli (artist), Pipo Pescador (musician), Nicolás Nóbile (author and coach), and Veronica Vieyra (actress).