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Hakone is the location of a noted Shinto shrine, the Hakone Gongen, which is mentioned in Heian period literature. During the Gempei War, Minamoto no Yoritomo prayed at this shrine for victory over his enemies, after his defeat at the Battle of Ishibashiyama, which was is located in neighboring Manazuru. As with the rest of Sagami Province, the area came under the control of the late Hojo clan of Odawara during the Sengoku period. After the start of the Edo period, Hakone-juku was a post station on the Tokaido highway connecting Edo with Kyoto. It was also the site of a major barrier and official checkpoint on the route known as the Hakone Checkpoint which formed the border of the Kanto region. Under the Tokugawa shogunate, all travellers entering and leaving Edo along the Tokaido were stopped here by officials. Their travel permits and baggage were examined to enforce Tokugawa laws that restricted the travel of women and weapons.

After the start of the Meiji Restoration, Hakone became a part of the short-lived Ashigara Prefecture before becoming part of Ashigarashimo District in Kanagawa prefecture in August 1876. Hakone attained town status in 1889. After merger with five neighboring towns and villages in September 1956, it reached its present boundaries.

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