Known as former barrio of Cauyan a neighboring municipality in the present time, Sipalay City was used a garrison for the Spanish soldiers protecting and guarding the southern corridor of Buglas or Negros Island. People came from the island of Panay was said the first immigrants of Sipalay. the town being just across a short sea span from what is now Iloilo. When the new settlers arrived, they drove away the natives to the mountains. No roads existed during the time, and trading was easier with Iloilo and Panay through sailboats. When the Americans came development was introduced with the putting up of schools and roads. Literacy among residents was improved.
Sipalay became a lookout point when the Japanese occupied the country, with the town being used as an outpost by the guerillas. It was also in Sipalay, in Campomanes or Maricalum Bay, where the first American submarine landed to deliver arms and supplies for the forces commanded by airman-hero Col. Jesus Villamor.
The staging of the final fight with the Japanese jumped from this point when sufficient supplies shipped from Australia arrived.
Sipalay got its name from the old native phrase si palay meaning ‘there is rice’. Chinese traders, who were not able to pronounce the ‘R’ in the local word Paray are believed to have helped disseminate the name Sipalay as rice abundantly grows in the area and is freely traded.
Trade and commerce is gradually developing in the City. The table shows the existing number of business and commercial establishments and their classifications.
Cottage industries such as furniture making and native crafts production also thrive in the city.