The town was founded with royal status by King James I of Aragon in 1274 during his campaign to regain Muslim territory in present-day Valencia during the Reconquista.

The city is the birthplace of Francisco de Asís Tárrega y Eixea (1852–1909) who was a Spanish composer and classical guitarist of the Romantic period.

Both the Castilian Spanish Villarreal and Valencian Vila-real are cognates meaning 'Royal Village', due to the city's foundation by King James I of Aragon.

Villarreal was founded on 20 February 1274 by King James I of Aragon (hence its royal status), to strengthen his reconquest of Eastern Spain from the Moors.

In the 19th century, the cultivation and trade of oranges was introduced, which gave the town great economic progress, led both by businessmen and by farmers' associations or "cooperatives".

After the Spanish Civil War (1936–1939), the earnings obtained from the orange trade allowed several entrepreneurs to build ceramic tile factories as a way to diversify their industries.

Sights in the town include: Villarreal's economy has evolved since the days of cultivation and trade of oranges in the last century to the manufacturing of ceramic tiles, which today is its most important source of income.

Villarreal CF full-back Joan Capdevila played in the Spain national squad that won the 2010 FIFA World Cup in South Africa.