Icaria has been inhabited since at least 7000 BC, when it was populated by the Neolithic pre-Hellenic race of Pelasgians. Around 750 BC, Greeks from Miletus colonized Icaria, establishing a settlement in the area of present-day Campos, which later became the ancient capital city of Oenoe.
Icaria, in the 6th century BC, became part of Polycrates' sea empire, and, in the 5th century BC, the Icarian cities of Oenoe and Thermae were members of the Athenian-dominated Delian League. In the 2nd century, the island was colonized by Samos.
At this time, the Tauropolion, the temple of Artemis was built at Oenoe. Coins of the city represented Artemis and a bull. There was another, smaller temenos that was sacred to Artemis Tauropolos, at Nas, on the northwest coast of the island. Nas had been a sacred spot to the pre-Greek inhabitants of the Aegean and an important island port in antiquity, the last stop before testing the dangerous seas around Icaria. It was an appropriate place for sailors to make sacrifices to Artemis Tauropolos, who, among other functions, was a patron of seafarers; here, the goddess was represented in an archaic wooden xoanon.
The Knights of St. John, who had their base in Rhodes, exerted some control over Icaria until 1521, when the Ottoman Empire incorporated Icaria into its realm. The Icarians hanged the first Turkish tax collector but managed to escape punishment, as none would identify the guilty one and the Turks realistically determined that there was neither profit nor honour in punishing all.
The Ottomans imposed a very loose administration, not sending any officials to Icaria for several centuries, although in later years they would appoint groups of locals in each village of the island to act as Kodjabashis in order to collect taxes for the empire. The best account we have of the island during the early years of the Ottoman rule is from archbishop J. Georgirenes who in 1677 described the island with almost 1,000 hardy, long-lived inhabitants, who were the poorest people in the Aegean. Without a decent port (the locals destroyed the island's ports in order to protect themselves from pirate raids), the island depended for its very limited intercourse with the outside world on small craft that were drawn up on the beaches, for which Icarian boat-builders had a high reputation, building boats from the abundant fir forests; they sold boats and lumber for coin and grain at Chios. The inshore waters, Georgirenes asserted, provided the best cockles in the Archipelago. Goats and sheep roamed virtually untended in the rocky landscape. Cheeses were made for consumption in each household. Icaria in the 17th century was unusual in the Archipelago in not providing any wine for export; rather than keeping the wine made for local consumption in barrels, they continued to store it in the age-old fashion, in terracotta pithoi sunk to their rims in earth, which helped protect their supplies from both tax collectors and pirates.
Apart from three small towns, none of which exceeded 100 houses, and numerous village settlements, each house had a walled orchard and a garden plot. Unlike the closely built towns of Samos, the hardy inhabitants lived separately in fortified unfurnished farmsteads.
The ruins of the lighthouse on the promontory that faces Samos, called the "Tower of Icarus", were strictly off limits to the islanders, as tradition asserted that there was treasure to be found in them.
In 1827, during the Greek War of Independence, Icaria broke away from the Ottoman Empire, but was not included in the narrow territory of the original independent Greece and was forced to accept Ottoman rule once more a few years later.
The island suffered losses in property and lives during the Second World War as the result of the Italian and then German occupation. There are no exact figures on how many people starved, but in the village of Karavostamo alone over 100 perished from starvation.
After the ravages of the war the nationalists and communists fought in the Greek Civil War (1946–49), and the Greek government used the island to exile about 13,000 communists. To this date, a number of locals have remained sympathetic to left parties and communism, and, for this reason, Icaria is referred to by some as the "Red Rock" (Κόκκινος Βράχος, Kokkinos Vrahos).
The quality of life improved greatly after 1960, when the Greek government began to invest in the infrastructure of the island to assist in the promotion of tourism. Today, Icaria is considered one of the world's five "Blue Zones" – places where the population regularly lives to an advanced age (one in three make it to their 90s). This is due to healthy diets and lifestyles.