The name of the community comes from the nearby Portland Hill. The hill was named so by Captain James Cook for its resemblance to Portland Head on the Dorsetshire coast of England.
The first settlers of the community were believed to be Alain Offery of Brittany and Frank L'Abbe and his wife Bettiah House. The first census was taken in 1857 and showed a population of 27. After 1900 new settlers came to the area for the lobster fishery. During this time, Angus Wentzell came to the area to set up a lobster factory. Most residents relied on the fishery for their income and supplemented it with some farming and woods work.
In the 1920s Canadian and American sport fishermen came to the area to fish for salmon. Noted sports fisherman Lee Wulff provided them the services they needed while there. When a road was constructed to the Portland Creek, the community lost its wilderness appeal and the tourism industry suffered.
In the 1960s some oil exploration was done around the community, but the deposits were too small to develop. Near the community is the unusual rock formation called the Arches. This site is frequented by tourists, especially since the opening of Gros Morne National Park.