Archeology suggests the territory occupied by the modern town was inhabited as far back as 3000 BC, as evidenced by uncovered burials dating to the Bronze Age.

In 1581, king Stephen Báthory handed Jagielnica and a number of other land portions to the voivode Stanisław Lanckoroński (died 1535) as reward for his loyal service to the queen Anna Jagiellon.

During the Khmelnytsky Uprising, the town saw intense fighting as the citizens attempted to overthrow what they perceived as a society controlled by Poles and Turks.

Armies led by Hetman Bohdan Khmelnytsky failed to storm the Yahilnytsia castle, located in the town.

During World War II, the USSR secured control over Yahil'nytsya and murdered several prominent villagers through the NKVD.

On November 27, 1942, more than 52 people from both Yahil'nytsya and nearby Chortkiv were executed for alleged cooperation with the Organization of Ukrainian Nationalists in what is now called the "Yahilnytsya tragedy".

Yahil'nytsya returned to Communist control following the end of the war, and in 1948 more than 167 farms were forced to collectivize during the Three-Year Plan.