The settlement was originally named Cille Chumein, after Saint Cummein. After the defeat of the Jacobite uprising in 1715 a fort was built in the village from 1729 to 1742 and the village was renamed after the fort to Fort Augustus. The fort is named after William Augustus, Duke of Cumberland, one of the sons of George II. The fort was captured by the Jacobites in April 1745, just prior to the Battle of Culloden.
The actual fort was sold to the Lovat family in 1867 and in 1876 they passed the site and land onto the Benedictine order. The monks made an abbey from the fort and later constructed a school there but abandoned the site in 1998.
The village was served by the Highland Railway Company line to Fort William from 1903 until 1946. The Caledonian Canal connecting Fort William to Inverness passes through Fort Augustus.