The earliest residents of Kodaikanal were the Palaiyar tribal people. The earliest specific references to Kodaikanal and the Palani Hills are found in Tamil Sangam literature of the early Christian era.
Modern Kodaikanal was established by American Christian missionaries and British bureaucrats in 1845, as a refuge from the high temperatures and tropical diseases of the plains. In the 20th century a few elite Indians came to realise the value of this enchanting hill station and started relocating here.

Tourism has been impacted by industrial pollution issues including the closure of a mercury factory owned by Unilever's Indian subsidiary Hindustan Unilever after evidence of widespread mercury pollution. to date no proper clean-up operation has been mounted.

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