The history of the town begins in 1886 when Ali bin Said, an Islamic scholar from Parit Sakai, was appointed Orang Kaya (noble lord) officer by Sultan Abu Bakar of Johor.

Ali was sent by his father, Orang Kaya Said, the first Muar District headman (penghulu) appointed by Temenggong Ibrahim, to Mecca upon the completion of his religious study in Malacca at the age of 15.

Orang Kaya Ali retreated to the south coast in the Malacca Strait riding a big boat weighing about one ton bringing together adequate ration of food for 30 days and 16 followers to find new areas suitable opening a villages.

After landing in an area about 30 km from Muar, followers of Ali opened a village and planted various trees and crops like durian, 'talas' and paddy.

The name "Sungai Balang" was immortalized for the village as the bravery and successes of Orang Kaya Ali and his followers opening the new areas and sailing along the coast to present the agricultural products had successfully eliminated piracy in the Malacca Strait which inspired Sultan Ali's decree in naming Sungai Balang after their courage against the pirates in the Malacca Straits which were considered as great prowess achieved only by warlords (Hulubalang in Malay).