Most probably, the ancient Greek polis of Boutheia was situated in Çeşme. In the 5th century BC, Boutheia was a dependency of Erythrae and paid tribute to Athens as a member of the Delian League.

The town of Çeşme itself experienced its golden age in the Middle Ages, when a modus vivendi established in the 14th century between the Republic of Genoa, which held Chios (Scio), and the Beylik of Aydinids, which controlled the Anatolian mainland, was pursued under the Ottomans, and export and import products between western Europe and Asia were funneled via Çeşme and the ports of the island, only hours away and tributary to Ottomans but still autonomous after 1470.

Chios became part of the Ottoman Empire in an easy campaign led by Piyale Pasha in 1566. In fact, the Pasha simply laid anchor in Çeşme and summoned the notables of the island to notify them of the change of authority.

After the Ottoman capture and through preference shown by the foreign merchants, the trade hub gradually shifted to İzmir, which until then was touched only tangentially by the caravan routes from the east, and the prominence of the present-day metropolis became more pronounced after the 17th century. In 1770, the Çeşme bay became the location of naval Battle of Chesma between Russian and Ottoman fleets during Russo-Turkish War (1768–1774). After the Balkan Wars, Bosniaks mainly from Montenegro settled in the environs of Çeşme such as Alaçatı and Çiflikköy.

In 1924 with the Population exchange Muslims from Greece mainly from Karaferye settled to the town.

Çeşme regained some its former lustre starting with the beginning of the 19th century, when its own products, notably grapes and mastic, found channels of export. The town population increased considerably until the early decades of the 20th century, with immigration from the islands of the Aegean and the novel dimension of a seasonal resort center becoming important factors in the increase.

The viniculture was for the most part replaced with the growing of watermelons in recent decades, which acquired another name of association with Çeşme aside from the thermal baths, surfing, fruits, vineyards, cheese, tourism, and history.