In early English and French maps, the area of was noted as "Baya Santa Rosa" or "Bay St. Rose," but there were no European settlements in the area until after Florida became a State in the Union. The Confederate 1st Florida Regiment, commanded by Colonel George Walton, established Camp Walton on the site of an earlier American fort from the French and Indian Wars. The Regiment's mission was to protect the Florida "Narrows", but they did not see any combat during the war. The men were kept busy digging artifacts from the nearby Temple Mound, and these artifacts were put on display in the Camp.

Originally, the Gulf of Mexico did not connect to the Choctawhatchee Bay near Fort Walton Beach. Since this posed an extreme danger of flooding to the area, in 1926 four men cut a drainage ditch two feet wide across Okaloosa Island using only shovels. That hand dug trench opened a torrent of rushing water and within two hours, the ditch was over a 100 yards wide and had created the East Pass. The East Pass is the only waterway connecting the Choctawhatchee Bay to the Gulf of Mexico for approximately 60 miles in any direction. The Army Corp of Engineers dredges portions of the East Pass periodically to keep the water deep enough for boats to move freely back and forth.

In 1930, the population of Fort Walton Beach was about 90 people. Today, the area is host to two Air Force Bases, Hurlburt Field, which is home to the 1st Special Operations Wing and Headquarters Air Force Special Operations Command, and Eglin Air Force Base, the largest air base in the free world. Although famous as a beach vacation destination, Fort Walton Beach offers plenty of activities for residents and visitors alike, including shopping, entertainment, the arts, and recreation