Permission to found the town was officially granted in 1752, under the leadership of founder, Captain Cristóbal González de la Cruz, who among other residents had an interest in converting some cow farms into an agricultural village.

At the beginning of the 19th century, wealthy Spanish families arrived in El Pepino, fleeing the revolutions of Venezuela and the Dominican Republic.

Later, by 1850, several families from Catalonia and the Basque Country in Spain joined the large number of isleños (Canary Islanders) that had made El Pepino their home.

Basques in the municipality, in remembrance of their home region and its religious patron, saw the need of updating old traditions used by the Canary Islanders and started to call the town San Sebastián, and thus got the name formally changed by the central government authority.

He assembled an ad hoc team of volunteers, some who were retired AEE electricians, set safety protocols, and their mandate was to get the electrical power back up and running for the people of San Sebastián.

[5] A monument honoring the accomplishments of the Pepino Power Authority, as they were quickly named, was erected in Plaza de la Identidad Pepiniana in San Sebastián barrio-pueblo.

[23] Other landmarks and places of interest in this municipality include:[24] The Robles Waterfall (located within the Gozalandia waterfalls zone) – It is a favorite with the locals however, several deaths have occurred at Gozalandia, including tourists[25][26] Church of Saint Sebastian the Martyr on the US National Register of Historic Places, is located in the Pueblo of San Sebastián.

[27] The Casa de Doña Bisa Museum located across from the main square in downtown features information on what life was like in the early 20th century.

The current mayor of San Sebastián is Eladio "Layito" Cardona Quiles, of the Popular Democratic Party (PPD).

The Fiestas Patronales de San Sebastián is a religious and cultural celebration that generally features parades, games, artisans, amusement rides, regional food, and live entertainment.

[35][36] Other festivals and events celebrated in San Sebastián include: The Luis Aymat Cardona Coliseum is where the Los Caribes volleyball team plays their games.

[39] It consists of a rectangular flag of the usual proportions, crossed by a white waved band that separates its red superior part from the inferior one, which is green.