Ennistymon derives its name from INIS DIAMAIN which is generally translated as Diamain’s river meadow. Westropp thought the name might signify the fruitful riverside meadow. Dinneen’s dictionary gives a choicer translation of the name which could signify the hidden or secret island and a more prosaic rendering of DIA-MHAOIN, as in reference to ecclesiastical property, may be more exact as a Saint Luchtighern is reputed to have had an abbey here.

Ennistymon’s name could be linked to its physical features. It is thought that at one time the area on which The Falls Hotel is now built was an island. The steep hill on which it stands is partly natural and partly artificial. Some historians claim that Ennistymon’s name INIS DI MAIN refers to the island of the middle house. In 1564 the O’Briens of Thomond acquired a castle in a wooded estate by the cascading Cullenagh river. This castle was known as the "middle house", being central to the O’Brien castles at Dough and Glann. Today the Falls Hotel (formerly Ennistymon House) occupies the original castle site.

Ennistymon is hidden in a recess among the hills. It lies on the southern edge of the Burren, two miles inland from the Atlantic. The narrow street near the bridge over the Cullenagh River is the oldest part of the town. A little below the bridge, the river rushes over an extensive ridge of rocks and forms a beautiful cascade about 1½ miles away from where it joins the river Derry. The united streams continue towards the sea as the Inagh River. The town developed around this old bridge, the lowest crossing point from the sea. The Moland Survey of 1703 states "The Farm of Inishtimond is 30 miles distant from Limerick, from Ennis 13 and 17 from Kilrush, it is a manor and has on it a good castle and a house joyning to it 2 storeys high and in good repair, a stable and other convenient outhouses, with a small garden, a corn mill worth about 5 per annum and 7 or 8 cabins."

Brian Merriman the poet, and author of "The Midnight Court" was born in Ennistymon around 1749.

From the late eighteenth century Ennistymon had a Bridewell and Session House. The Session House stands at the junction of Market Place and Parliament Street, so called because it subsequently housed the Courthouse and Constitutional Hall. By 1824 the population was 1,500 and street names such as New Town Street and Market Place reflect the towns expansion. Ennistymon was described by Samuel Lewis in 1837 as irregularly built but of picturesque appearance. Fortunes changed with the arrival of the Famine. A workhouse was built to accommodate the poor and destitute. The Ennistymon workhouse was built to accommodate 870 inmates. However, in 1847 the average number of inmates per month was 600 and the number of deaths 961. By 1850 there were over 2,500 people in the various workhouses of the Ennistymon Union. Between 1847 and 1851 almost 5,000 people had died, many of cholera. Though few traces of the workhouse now remain, there is a small stone-walled cemetery, no longer in use called the childrens graveyard and an unmarked famine graveyard adjacent to the workhouse site - a sad memorial to that grim period.

Griffiths Valuation of 1855 provides some clues as to the economic life of a town recovering from famine. There were about 241 houses dispersed throughout seven streets and the lanes leading from them. The number of businesses was listed as 27. An emerging middle class, consisting of shop-keepers and business people had shifted the centre of social activity away from the older areas of Churchill and Bogberry. The building of the Butter Market shortly after the middle of that century marked a new stage in the development of Ennistymon. A building of character, its air of bustling commerce and its huge firkin making industry gave Ennistymon Butter Market the reputation for many years as being second in importance only to Cork. By the 1880’s the town was prosperous. In 1887 the West Clare Railway was opened and shortly afterwards it arrived in Ennistymon. The railway line’s initial commercial benefit was the immediate transportation of butter and cattle from the local markets and fairs and the regular supply of goods to local shops. The town also boasted of having its own woollen mills for the manufacture of tweeds and flannels.

The "Troubles" are remembered in Ennistymon and the surrounding area. The British in reprisal for the Rineen Ambush of September 22nd, 1920, burned Devitt’s drapery and Madigans Pub and the Callinan, Cleary, Devitt and Whelan houses. P.J. Linnane was shot and Tom Connole was tied up and thrown into his burning house to die. Nearby Lahinch was also attacked.

The 1930’s saw the installation of electricity, hastened by the Governments decision to give an important creamery to the town. With it came public lighting, running water and a new sewage system. The picture of Ennistymon as a thriving and prosperous market town continued up to the 1960’s. There was a decline in fortune with the closure of the West Clare Railway, and the changes in the fairs and creamery activities and also because of increased emigration. Yet, Ennistymon remains at the centre of the region’s commercial life, and the town retains its trading dimension. Industries such as DATA display and Stubbens continue to play an important role in the economy of the area. Today the town of Ennistymon is lively and bustling and the majority of town businesses are still family-owned and run.