The city was first founded by the British in 1827, who leased the island from Spain during the colonial period. Named Port Clarence, it was used as a naval station in the effort to suppress the slave trade. Many newly freed slaves were also settled there, prior to the establish of Sierra Leone as a colony for freed slaves. While many of them later relocated to Sierra Leone, some of their descendants, called Fernandinos, can still be found in Malabo and the surrounding area, where they constitute a distinct ethnic group, speaking their own Afro-Portuguese pidgin dialect.
When the island reverted to complete Spanish control, Malabo was renamed Santa Isabel. It was chosen to replace the mainland town of Bata as the capital of the country in 1969, and was renamed Malabo in 1973 as part of President Macie Nguema Biyogo's campaign replace European place names with African ones.
During his "reign of terror," Nguema Biyogo suppressed the country's Bubi minority, which formed the majority on Bioko Island (then called Fernando Poo), and brought many of his own tribespeople, the Fang to Malabo. In the final years of his rule, when Equatorial Guinea was sometimes known as the "Auschwitz of Africa," much of the city's population fled as, indeed, did much of the country's. Malabo has yet to recover from the scars of that period.