The deeper Grand Manan Channel lies to the north and west of the island, separating it from the coast of Washington County, Maine.

Likely used by the Passamaquoddy Nation in the pre-European era, Machias Seal Island was never actively nor successfully settled during the years when the French and the British were exploring this part of North America.

Article 2 attempted to establish the boundaries between the United States and British North America and part of this text stated the following: And that all disputes which might arise in future on the subject of the boundaries of the said United States may be prevented, it is hereby agreed and declared, that the following are and shall be their boundaries, from the northwest angle of Nova Scotia, that angle which is formed by a line drawn due north from the source of St. Croix River to the highlands ... ... by a line to be drawn along the middle of the river Saint Croix, from its mouth in the Bay of Fundy to its source, and from its source directly north to the aforesaid highlands which divide the rivers that fall into the Atlantic Ocean from those which fall into the river Saint Lawrence; comprehending all islands within twenty leagues of any part of the shores of the United States, and lying between lines to be drawn due east from the points where the aforesaid boundaries between Nova Scotia on the one part and East Florida on the other shall, respectively, touch the Bay of Fundy and the Atlantic Ocean, excepting such islands as now are or heretofore have been within the limits of the said province of Nova Scotia.The "northwest angle" of Nova Scotia refers to what is today New Brunswick, and the Canada–U.S.

Once the St. Croix River was unambiguously identified following a commission provided by Jay's Treaty of 1794, it became clear that Machias Seal Island, as well as Grand Manan Island, was within 20 leagues (60 nmi (110 km)) of the shores of the United States and south of the line drawn due east from the mouth of the St. Croix River, but it remained unclear whether they were within the defined limits of Nova Scotia.

During the War of 1812, the United Kingdom occupied coastal Maine extending from the border with New Brunswick (created from Nova Scotia in 1784) west to the Penobscot River valley.

Britain established possession of Machias Seal Island, and under pressure from shipping interests at the burgeoning port of Saint John, New Brunswick set up a lighthouse in 1832.

Until the 1970s–1980s, lighthouse keepers from the Canadian Coast Guard would live on the island with their families, receiving supplies by sea from Grand Manan or Saint John.

In 1918, with Canadian agreement, a small detachment of U.S. Marines was placed on the island following the U.S. entry into the First World War, as a means to assist in protecting the territory and its key lighthouse guarding the entrance to the Bay of Fundy from German U-boat attack.

Sovereignty of Machias Seal Island (and North Rock) would likely not still be in question today if it were not for the decision by Canada and the United States to avoid settling this issue in their 1979 joint application to the International Court of Justice (ICJ) at The Hague in the Netherlands to have the maritime boundary delineated in the Gulf of Maine for fishing and mineral exploration purposes on Georges Bank.

Machias Seal Island and North Rock lie in an area of overlapping claims, known by local fishers as the "grey zone".

[11] Rules and rights over the "grey zone" are governed by political and social factors, such as increased lobster fishing efforts and different management styles,[10] which becomes a source of conflict when more than one entity seeks to control the space.

Within the disputed territory, Canadian and American trap fishers compete to fish for a valuable marine resource, lobster, and do not agree on management and conservation efforts.

Direct conflict arises between fishers from both countries as they feel that their well-being is threatened, and they attempt to take matters into their own hands.

[14] Since the 1984 ICJ ruling on the Gulf of Maine decided the fate of offshore boundaries,[15] Machias Seal Island and neighboring North Rock, an exposed rock outcropping about 2.2 nautical miles (4.1 km) north-northeast at 44°32′15″N 67°05′10″W / 44.53750°N 67.08611°W / 44.53750; -67.08611, as well as the surrounding waters, have become a political football for local politicians in fishing communities of coastal Charlotte County, New Brunswick and Washington County, Maine.