Legend says that the name Ligao came from a corruption of the word “ticau”, once an abundant tree whose poisonous leaves were popularly used to catch fish in rivers or creeks. According to stories, a group of Spaniards passing by a ticau tree asked for the name of the place. The natives thinking they were asking for the name of the tree, answered “tigaw”. The Spaniards mispronounced the word as “Ligao” and, since then, the place became known as Ligao.
Most Ligaoeños, however, believe that the name Ligao was originally “licau” which means to take the long way around or to turn away from the ordinary or usual route.
Another theory on the origin of the word Ligao is that it came from the Tagalog word “Ligaw” meaning to court or win a lady’s love. This idea was based on the common knowledge that the place was then known for its beautiful maidens. Many young and eligible men from far and near would come a-courting, hopeful for their maiden’s love. A group of such young men was once accosted by a group of Spanish soldiers who asked for the name of the place. The young men thought the foreigners were asking where they were going and they answered “Manliligaw” (to go a-courting). The Spaniards thought the place was called “Manliligaw”. For a while the place became known as “manliligaw” until it was shortened to “Ligao” for facility of pronunciation.
LIGAO started as a small settlement known as Cavasi during the 16th century. It grew in population as it attracted other natives from nearby settlements. Its distinctive trait was that every native resident was peaceful in his or her endeavors. Eventually, however, power struggle among ambitious and aggressive leaders caused trouble and endangered lives and properties as they created divisions within the growing settlement. There arose five divisions led by Maginoos (Chieftains), namely: Pagkilatan, Maaban, Sampoñgan, Makabongay and Hokoman. Rivalry and strife persisted despite Chieftain Hokoman, who considered himself as the supreme leader of the whole settlement. Thus, the once peaceful inhabitants lived in constant fear. Luckily, according to Father Felix de Huerta, a Spanish Corporal endowed with the ability to settle jurisdictional disputes among the natives and their ruling Maginoos, mediated. Chieftain Pagkilatan was henceforth appointed supreme leader of the entire settlement with the approval of the other chieftains. Finally, tranquility and peace were brought back to the inhabitants.
The once minor settlement prospered politically, socially and economically from its founding as a barrio of Polangui in 1606. It was ceded to Oas in 1665 and finally became an independent municipality in 1666.
From the beginning, Ligao’s economic backbone was primarily agricultural. Until the 1960s, majority of the population settled in rural barangays where farming was the main source of livelihood. Sustained increase in population throughout the years resulted to over employment in the agriculture sector. This led to the out-migration of farm workers and entire households. Those unemployed were attracted by the economic opportunities available in the town's poblacion and other urban centers in search of the proverbial “green pasture”. By the middle of the 1970s, the municipal government intensified its effort to develop Ligao’s rural areas in an effort to improve economic conditions therein. The municipality gained further economic growth when it was made part of the integrated area development of the Bicol River Basin Development Program in 1976.
In the latter part of 1998, then Mayor Fernando V. Gonzalez started efforts to convert the Municipality of Ligao into a Component City of the Province of Albay. After passing through both Houses of Congress, President Gloria Macapagal-Arroyo approved Republic Act 9008 on February 21, 2001. Ligao’s conversion into a City was ratified by a plebiscite on March 24, 2001 with a YES vote of 17,754 as against a NO vote of 1,387. On that same day, the Commission on Elections proclaimed Ligao a Component City making it the sixth city in the Bicol Region.