Hatsushima is located within the caldera forming Atami Bay, and was created by an uplift of the seafloor due to volcanic activity.

Hatsushima has been inhabited since prehistoric times, and remains from the Jōmon period have been found in the island's interior.

It is mentioned in poetry by Minamoto no Sanetomo during the Kamakura period, and per records dated 1351, the island had 18 households.

In 1913, the future Emperor of Japan Hirohito visited the island to pursue his hobby of marine biology.

In the 1980s, during the Japanese asset price bubble an investment group attempted to overcome the island's objections to selling their land by making them shareholders in a venture company which intended to turn most of the island into a self-contained resort; however, the venture went bankrupt in 1999.