In 1770 this area was referred to by Pedro Cortes, the Archbishop of Guatemala (1776–1779), as the "hacienda Tepeahua", one of the largest estates in the parish of San Jacinto.

The region was known as Tepehua, a name derived from a Nahuatl expression meaning "mountain of the oak trees", before the Congress of the Federal Republic of Central America authorized the name "Puerto de La Libertad" (Port of Freedom) on February 24, 1824.

The national assembly chartered commercial trade on the Pacific coast in 1831, and the first steamboat arrived at La Libertad on June 7, 1857.

La Libertad was incorporated as a village by an Executive decree of July 19, 1858, which was approved by the Congress on February 11, 1859.

This was done to relieve the community's excessive dependence on the town of Huizúcar, located at a considerable distance and connected by bad roads.

The Salvadoran government enfranchised La Libertad as a villa (town) on March 10, 1874, and as a ciudad (city) on 23 August 1957.

[3] The resort includes a boardwalk, restaurants and an amphitheater, while small seafood markets and craft shops are located at the wharf.

Among the area's highlights is the Parque Nacional Walter Thilo Deininger (Walter Thilo Deininger National Park), situated on the Coastal Highway (CA-2) near Playa San Diego, going east from La Libertad towards the El Salvador International Airport.

The inside cove, fronting the town's restaurants, is called "La Paz"; this section is good for longboarding.

On a good day, when the swell is 6 to 8 feet high (Hawaiian scale), the upper part of the point produces the best waves, allowing a ride of about 300m or more.

Local fishermen sell their catch of the day here; seafood on display includes a variety of fish such as snapper, tuna, and rays, as well as squid, shrimp, lobster, blue crabs (popularly known as "jaibas"), clams, and scallops.