It is believed that the earliest inhabitants were of Malay lineage, coming all the way from Borneo in their swift and sturdy boats called "Balangay".

The proper pronunciation of the town's name is Pī-té, long i, short guttural ê, sound at the end.

Legend has it that there was once a young Franciscan priest who was tasked by his superior to visit their newly founded settlements alongside Laguna de Bay.

His men first encountered some resistance from the settlers of what is now Cainta in Rizal Province, but defeated the lightly armed natives.

The pueblo consisted not only of Paete, but included the neighboring towns of Pakil, San Antonio, Longos and Kalayaan.

In 1945, combined Filipino and American soldiers, as well as recognized guerrillas liberated Paete and defeat by the Japanese and ended in World War II.

[16] Poverty incidence of Paete Source: Philippine Statistics Authority[17][18][19][20][21][22][23][24] The town has had a long reputation for its craftsmen highly skilled in wood carving and its embellishment.

In 1887, José Rizal described Paete as a town where "carpenter shops" were issuing images "even those more rudely carved" (chapter VI, Noli Me Tangere).

[citation needed] The official town hero is not a statesman nor a soldier but a woodcarver, the master artisan Mariano Madriñan, whose obra maestra, the lifelike Mater Dolorosa, was honored by the King of Spain with a prestigious award in Amsterdam in 1882.

[25] Taka (taká), papier maché made using carved wooden sculpture used as a mold, also originated from Paete.

Ice sculptures and fruit and vegetable carvings done by Paeteños abound on buffet tables of cruise ships and world-class hotels and restaurants.

Today the town thrives mainly on the sale and export of woodcarvings and taka, tourism, poultry industry, farming and fishing.