Ecuador was populated by Indian tribes before Europeans arrived in 1526. The Inca Empire extended around the Baños area. The first Spanish settlement however was established 1534, in Quito. Francisco Pizarro who discovered Peru, also founded settlements around Ecuador. In the process, he ambused the Inca leader, Atahualpa, and executed him while demolishing the Empire in whole. Until 1740, Ecuador remained part of the Viceroyalty of Peru, until it was given to Spaniards along with Columbia and Venezuela. Since it did not have gold or silver however, the country was rather undesirable to the Spanish colonialists. Regardless, Spanish reign lasted until 1822.

Surprisingly, there was little uprise during the time of Spanish rule by Ecuadorian Indians, though they suffered extremely under this rule. The first rebellion against the Spaniards occurred as early as 1809; however, independence was not gained until 1822. In 1851, General Jose Maria Urbina freed all slaves and gave all Ecuadorians equal rights. After independence was achieved, Ecuador experienced much instability due to politics and economic struggle. However, when cocoa became a successful cash crop in the end of the 19th and early 20th century, Ecuador benefited since it has many cocoa fields. This economic success served to anchor the previously unsound administration, which until then was primarily run by military dictators. In 1941, Ecuador was invaded by Peru and lost much of its Amazon territory to Peru. However, after World War II, Ecuador regained strength due to banana exports. In recent history, Ecuador has endured a near constant changing of presidents; however, its economy continues to improve. Throughout this history, Banos remained a small town with little national strength. Since the mid-20th century, it has been known mostly for its tourism.