Previously known as Punta Troia (derived from the Latin Port Traiani), changed its name to Punta Ala (from aviation jargon, Ala means wing in Italian) after the Italian aviator Italo Balbo, who had purchased some fortifications and villas in the area which later became his residences.

The modern day tourist center developed during the course of the twentieth century, particularly in the 1960s withe the plan of the architect Walter Di Salvo.

The town is famous for its sailing regattas which are held by the local Yacht Club Punta Ala and the well equipped tourist port, the home of Luna Rossa.

While presenting itself as a modern, functional and exclusive beach resort, Punta Ala was situated in a vital strategical position on the border between the Principality of Piombino in the north and the Grand Duchy of Tuscany to the south.

The Hidalgo Tower, overlooking the modern town, was built during the sixteenth century to defend the far end of the southern principality of Piombino.