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Natives of Palompon have the following legend about the naming of their place. An expedition of Spanish soldiers was once sent to liberate Hinablayan from the marauding moros who had seized the place. Upon entering the bay now known locally as Tungki, they saw a cluster of mangrove flowers floating on the waters. Asking their Filipino guides what these clusters were, the answer was "paungpung," which has evolved into the present name. Even today, some natives call the town Palompong.

The Spaniards found a little thriving colony in Palompon. The mild climate, good fishing grounds and favorable coastal location attracted migrants from neighboring towns.

The Jesuit missionaries who had been visiting the place since 1700, finally permanently settled in the village in 1737. The village was placed under the jurisdiction of Hilongos. With the help of the natives under the leadership of the famous Terio Able, better known as Panday Terio, the missionaries built the first chapel of lime and stone. A solid wall was built around the chapel as the building was used as a place of refuge during the frequent moro raids.

With the expulsion of the Jesuits in 1768, the parish passed into the hands of the Augustinians. On November 12, 1784, the village was created a parish independent from Hilongos. St. Francis Xavier was the town's patron saint as it is held that the miraculous image of the saint had saved the town time and again from the moro marauders. Father Martinez was designated as the first parish priest. The Augustinians built another church when the old chapel was burned down.

Palompon's first cabeza de barangay was named Molo. Other leaders were Anselmo Fuentes, better known as Tangu-an, Salvador (Baroy) Delgado and Bartolome (Ome) Pastor. Fuentes' name became a by-word for fearlessness in fighting the moro pirates. Capitan Ome improved transportation by constructing roads and bridges.

In 1885, the dreaded cholera struck hard. Since there were no medicines, the fatal epidemic raged on unchecked, with a daily toll of twenty deaths. In 1890, the infamous typhoon "Orokan" swept through the town causing immense loss to life and property. In 1892, smallpox brought a good number of the population to their untimely deaths.

When the Philippines passed from Spanish to American hands, Palompon was sparsely populated. In collaboration with the nationwide revolt against the new rulers, the people of Palompon carried on armed resistance in a small but intensive scale. In 1901, a small band of insurrects who were safely hidden in the mountains near the town, plagued the American troops stationed in Palompon. Among the well-known insurrects was the late Benigno Delgado, the commanding officer of that sector east of Palompon now called Bito. The superior training and arms of the Americans however, led to the final surrender of the revolutionists at the general headquarters of the American occupation forces at Baybay.

Teachers sent by the American government arrived at Palompon to start the education of the Filipinos. Classes were held under the shade of trees, and school materials were supplied by the teachers. Later on, the American teachers with the aid of the natives constructed a school house, desks and other school furniture. The pioneering teachers encountered countless difficulties. Their limited number and the new environment dismayed the teachers. To remedy the scarcity of teachers, the brighter students were given special lessons at night and after having satisfied their teachers that they could carry on the teaching load, were assigned as the first Filipino teachers.

As a result of the advancing cultural and intellectual life, local politics began to take shape. Among the first outstanding personalities of the time were Cresente Marquez, Eulogio Marilao, Mateo London and the famous Alfredo Parilla. Parilla held office from 1939 to the time of his death in 1953 with only one year of interruption, in 1945.

News of the advancing enemy in 1942 threw the town into panic, and the people hastily evacuated into the barrios and mountains. It was a ghost town that the Japanese occupied in the last days of March 1943. A Japanese garrison was established and the people were ordered to return to their homes under pain of death.

The Japanese puppet government reopened the schools. Books were strictly censored, the teaching of the Japanese language was greatly emphasized. The school however, lasted only two months for after the Japanese garrison moved out, the school was closed and the civilians evacuated back into the mountains.

When the Japanese left Palompon, a group of ex-USAFE soldiers formed a guerilla unit which was later attached to the Western Leyte Guerilla Warfare Forces. The unit served the double purpose of harassing the enemy and protecting the people from the plundering Filipino outlaws masquerading under the name of "guerillas."

The guerilla unit opened a general service school in Palompon to train military officers. Colonel Marcos Soliman supervised the school. Survivors of the infamous death march in Bataan assisted in the training. The townspeople supported the school by contributing food.

On September 12, 1944, American planes hovered over Palompon skies heralding the impending battle of Leyte. On September 24, bombers sank a Japanese vessel a few miles away from the shore.

After the Americans succeeded in gaining a foothold in the province, the bombing of Palompon became more and more frequent, and on the feast day of St. Francis Xavier on December 3, the town was subjected to heavy bombing and shelling. Houses and public buildings crumbled in the face of heavy artillery and bombs. On December 26, Palompon was again in friendly hands. The Americans entered the town of Palompon, a ghost town.

Palompon is fortunate to be free from the economic strangulation of land barons and business magnates. There was a time in the past when a few families attempted to draw a line between social classes but their attempts proved futile. Now it is a possession of the middle class.

The progress Palompon has made in the field of education is remarkable. From the time of the Spanish regime to the American occupation when Palompon became a center of learning and until the present, the people have not been remiss in their pursuit of higher learning. Demands for more school buildings were met and seeing the urgency and feeling, the compulsion of the need for a high school, the civic-spirited citizens of the town pooled their resources together and founded the present Northern Leyte College.