Hoapili, the Royal Governor of Maui, built the fort to protect the town from riotous sailors when Lahaina was used as an anchorage for the North Pacific whaling fleet.

[3] Sheriff William Owen Smith planted an Indian banyan tree in the courtyard square in 1873 to memorialize the 50th anniversary of the first American Protestant mission in Lahaina.

The property, including the courthouse and the tree, were engulfed by the 2023 Hawaii wildfires from August 8–9, which burned the historic town of Lahaina.

Historian Noelani M. Arista notes that by 1825; a kapu prohibiting women from going out to ships for the purpose of prostitution was proclaimed by the ali'i (Hawaiian chiefs), altering that familiar traffic of the burgeoning Pacific seaport towns.

Enraged that they could not cajole, coax, or coerce Hawaiian women into violating the kapu, the sailors turned their frustrations on the American missionaries, whom they blamed for the emergence of this new unreasonably strict moral law.

In the 1827 riots, the whaler John Palmer fired cannon shots over the home of missionary William Richards and threatened the safety of the community.

[17] Queen Kaʻahumanu (1768–1832) visited Maui in February 1832, just months before she died, to support the construction of a new fort to protect the town from whalers.

[19] Sailors who docked at Lahaina were subject to a sunset curfew; it they did not return to their ship when the drums sounded they would be imprisoned in the fort.

Wilkes observed, "After the king's palace, the fort is the most conspicuous object: it is of little account, however, as a defence, serving chiefly to confine unruly subjects and sailors in.

[26] On February 20, 1858, Lahaina experienced a violent hurricane[29] that destroyed approximately twenty buildings, including the original courthouse at Hale Piula, initially intended as a palace for Kamehameha III.

The new courthouse housed offices for customs, the postal service, the tax collector, the governor of Maui, a magistrates' court, a courtroom, and a jury room.

[33] The Old Courthouse then became home to the Lahaina Heritage Museum and its collection, art galleries, a visitor center, a community meeting room, and public restrooms.

[35] To memorialize the 50th anniversary of the first American Protestant mission in Lahaina, a banyan tree (Ficus benghalensis, Hawaiian: paniana[36]) seedling was planted on April 24, 1873, in the courthouse square by sheriff William Owen Smith, who had received it as a gift from missionaries in India.

All Banyan Tree Park events are hosted by The Lahaina Town Action Committee, which is in charge of the Visitor Center, 2nd Friday, Heui Craft Fairs and all festivals throughout the year including Halloween.

Halloween events in the park area, known as the "Mardi Gras of the Pacific", have long been a divisive issue between Maui County and the Cultural Resources Commission.