This shrimping village - known as Rocky Point to many U.S. visitors - might have ended up an Arizona seaport had it not been for the negotiating skills of the Mexican government.  Following the 1846-48 territorial war between Mexico and the United States, ongoing negotiations were conducted to determine the new border.  President Antonio López de Santa Anna did not want to give up territory that would separate mainland Mexico from the Baja California peninsula.  James Gadsen, a South Carolina railroad promoter, lobbied for a settlement that would give the United States a southern railroad route to the Pacific and a port on the Gulf of California (Sea of Cortés).  In 1854, The Gadsen Purchase acquired what is now the southern portions of Arizona and New Mexico for $10 million, but Mexico retained the land bridge to Baja.

The discovery of blue shrimp in waters off Cerro de Peñasco ("rocky point") established the village.  For a time, fresh water had to be hauled from the border town of Sonoita, 60 miles away over a sandy trail (now Mexico Highway 8).  The route was paved during World War II to provide a potential backup for U.S. West Coast shipping interests, then feared under attack by the Japanese.  Puerto Peñasco's shrimping industry took hold in the 1950s, and the town later benefited from its easy access to North American visitors.