The origins of Pala are deeply connected to the Meenachil River, which served as a vital artery for early trade and agriculture. Historically, the region was part of the Meenachil principality, ruled by the Meenachil Karthas, a local aristocracy who managed the lands until the mid-18th century. In 1754, the ambitious King Marthanda Varma of Travancore annexed the Meenachil territory, integrating Pala into the expanding Kingdom of Travancore.
Pala has long been a significant center for the Syrian Christian community, who played a foundational role in establishing the region's trade, particularly in spices and later, natural rubber. The town's prominent market, founded in the 18th century with the support of local rulers, helped it grow into a major commercial waypoint.
In the 20th century, Pala emerged as an educational pioneer in Kerala. The establishment of St. Thomas College in 1950 by the Diocese of Palai was a watershed moment, significantly boosting higher education in the region. Politically, Pala is widely recognized as the stronghold of the late K.M. Mani, a towering figure in Kerala politics who represented the Pala constituency in the State Legislative Assembly for over five decades (1965–2019), shaping much of the town's modern infrastructure and development.