Peng Chau has a long and glorious history that can be traced back all the way to the Neolithic period. Before the government reclamation work, Peng Chau used to shaped like a dumb-bell, now it looks more like a horseshoes. And thanks to the shelter provided by hills of the nearby islands, as well as its two natural sheltered bays, the island is rarely affected by the harsh climate of the tropics, providing a secured work and resting spot for locals and travelers.

Unexpectedly, the island is extremely rich in fresh water resources, which explains why it has been inhabited since the Neolithic period.

Since it is at the pearl river delta area, where the fresh water of the river- salt water of south china sea, Peng Chau is surrounded by a high quality marine ecology. Therefore the marine production is extremely rich, which resulted Peng Chau to be a highly developed fishing port as early as the Qing Dynasty.

During its heyday as a trade center, more than 200 fishing boats worked in the neighbourhood.

The Hong Kong government does not have any record on the History of Peng Chau, so the following narration is mainly based on related books, studies of cultural relics, and local residents' oral history. According to some historical records, Peng Chau was given to an aristocrat during the Song dynasty. In addition, there are archaeological evidence that suggest, by the Tang Song dynasty period, people has already settled down in Peng Chau. The oral history of the residents extends back in to the Qing Dynasty and shows that Peng Chau was an extremely prosperous trade market.

During the Qing Dynasty, Peng Chau already was a hub of development, and became the principal supply station for neighbouring islands and a prominent supply stopover spot for trading ships. At its peak, Peng Chau had 11 lime ash kiln factories, and employments were offered to residents who could either work directly as a labour in the ash kiln factory or as a collector of corals, shellfish and gastropods. The Materials are then bought back to the factory to convert into lime in the furnaces, lime at the time is differentiated into different grades and is used in for many purposes.

Many island residents also were engaged in commercial trade and agriculture.

The 1960s could be seen as the golden era of Peng Chau's industrial period. Following the decline of the limekiln industry, the largest factory in Southeast Asia for making matches began to establish in the northwestern coast of Peng Chau, employing more than 2,000 workers at its peak. Other large-scale factories included ones for steel pipes, teak furniture, shipyards, tanneries and so on. Light-weight industry were also flourishing, such as light bulb factories, cane-weaving industry, as well as many other types of handcrafts of "make-shift factories". The ceramic-painting processing workshop were also very popular at the time. These industries provided job opportunities for both the local residents and outsiders. People came to work from as far as Hong Kong Island and other nearby islands.