The history of Lignumvitae Key can be traced back to Columbus and the Spanish had it recorded on its chart in 1760 named as Cayo de la Leña. The island has its name today most likely because of the main tree found on it: The Lignumvitae Tree. The wood from the Lignumvitae tree is known for its attributes of being heavier than water, strong and durable. In fact, they even made bearings for submarine propeller shafts from it.
The island has several owners in its history. Records show that it was first purchased from the state by William A. Bethel. Later it was sold to Thomas A. and Edward A. Hine in 1888. These two brothers were known to have planted coconut trees on many of the Key islands and some think that they planted coconut trees on this island also.
William John Matheson, president of the Biscayne Chemical Company, purchased the island in 1919. After his purchase, he hired a full-time manager and built a coral rock home for that person to live in. The Matheson Family held the land all the way until it was sold in 1953 to three persons from Miami. The new owners then hired Russell and Charlotte Neidhauk to be the caretakers.