There is not much known about the early life and history of Koufonisia but according to the few excavations that took place in Kato Koufonisi and Keros islet it was discovered that the island has been inhabited since the pre-historic times. What is known so far has been garnered from the tombs and other artifacts that have been found over a period of time. These artifacts date back to the Early Cycladic, Roman and Hellenistic period.
The origin of the name Koufonisia has two versions. The first claimed that the name Koufonisia is actually the ancient name given to the gulf between Koufonisia and Glaronisi. Koufos Limin means Lee Port, where ships would anchor. Manesis supported this theory because there were a number of caves without large rocks found on this island.
A third theory was propounded by Anthony Miliarakis saying that Pano Koufonisi was "Fakousa" and Kato Koufonisia was "Pino". There was a lot of fighting between the Ottomans, the Venetians, the Moors and of course, the Byzantine Empire. They fought over the Cyclades and on Koufonisia, archaeologists found traces of the existence of the Moors, and a stone with an Arabic inscription was found on Kato or Lower Koufonisia. Wild pirates and waterborne bandits traipsed around the Aegean Sea ever since the Greek Persian wars and this is where the name Koufonisia or Koufonisi is found in the written language.
In Medieval times, Koufonisia followed the history of the rest of the Cyclades islands. However, they were very sparsely or not all inhabited as they were frequently raided by pirates. Only in the late 19th century, when piracy in the Aegean Sea was confronted by the Greek Navy, did few inhabitants come to Koufonissia again.
In 1830, the island of Koufonisia was free and became part of Greece. There were incidences of residents joining the pirates either out of choice or for occupation. In the years that followed after the Turks abandoned the island, it was found that the islands belonged to Amorgos, being under the authority of the Hozoviotissa Monastery of Amorgos. The land was leased to peasants who gave tribute to the monks in agricultural goods.
During World War II, at a time when the Cyclades were not considered important enough for the warring countries to have a garrison stationed there, Koufonisia was unaware of the ravages that the war left behind and their only indication was the German warplane that crashed near the summer port of present day. They found the German massacred bodies of the Italians washed up on the shores whom they buried east of the village.
The end of World War II saw the people of these islands turn to the sea for their daily food requirement. Now came the era of artificial refrigeration and cheap motor boats which made fishing activities relatively easier. The fish would then be transported in ice boxes to either Athens or Naxos where the earnings were good. More peasants decided to engage in fishing in order to make a living, and soon the settlements on Kato Koufonisia were abandoned for Ano Koufonissia. Here there were good harbors and the fishing industry flourished.