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The Coast Miwok American Indians had a presence in the area around Dillon Beach long before Europeans arrived in the Americas. It is thought that a few of their villages lay within the greater Dillon Beach area, including one around the feature known locally as the Sand Point.

In the 1850s, local historical figure Tom Wood operated in the area, employing the natives in harvesting of grain to be milled nearby. He would attempt to ensure that they were not taken advantage of by the British, French, or American traders that would ply the coast. Hides and tallow were traded for various manufactured goods, among them whiskey. Despite Wood’s efforts, many of them would fall victim to alcoholism, and while a few claim descent from the local Coast Miwoks, no full-blooded members live today. Toms Point, immediately south of Dillon Beach on the eastern shore of the bay, is named for Tom Wood, and Wood resided there with the small village he ingratiated himself into.

Irishman George Dillon and wife Mathilda arrived at what is now Dillon Beach from the eastern U.S. in 1868. When his friends and family showed interest in the area, he thought to capitalize on it; in 1888, he built an 11 bedroom hotel, restaurant, and general store. This is the Dillon Beach Resort in operation today. Visitors would explore the area on their way up the coast toward the redwood forests, strolling the beach, fishing, or digging clams from the nearby clam bars of Tomales Bay.