Cape Coral was founded in 1957 when real-estate developers Leonard and Jack Rosen purchased a 103-square-mile (270 km²) tract of land with a small group of partners. The land was then known as Redfish Point. The brothers created the Gulf American Land Corporation and began to market the land as a master-planned community and "waterfront wonderland".

The city has over 400 miles (640 km) of canals, most of which are navigable and many have access to the Gulf of Mexico. All canals are idle speed, no-wake zones. Idle speed is the slowest speed you can run and still have control of your boat.

At only 5 to 8.5 ounces and 7.5 to 11 inches tall, the Burrowing Owl (Athene cunicularia floridana) is one of the smallest of all the owls, and it is the only owl that lives underground. Unlike the Western species of the Burrowing Owl (athene cunicularia hypugaea) that lives in abandoned prairie dog burrows, the Florida species dig their own burrows. Cape Coral has upwards of 2500 burrows within the city limits.

The Fat Spy, which is featured in the 2004 documentary The 50 Worst Movies Ever Made, follows a boatload of teenagers who plan a scavenger hunt on a nearly-deserted island rumored to contain the fountain of youth. Originally released in 1966, it was rarely seen until the 1990s, when it fell into the public domain. Since then it has been widely released on DVD.

Nile monitors are typically brown and yellow with long sharp claws and a dangerous tail. They are extremely good predators, and at up to 7 feet in length, they can eat almost anything, posing a threat to both wildlife and pets. They are also excellent swimmers, able to hold their breath for up to an hour, so the city's many waterways provide these invasive lizards with an easy way to navigate Cape Coral. Because of the threat they pose, the Environmental Resources Division conducts a trapping program.

Cape Coral is a popular snowbird destination, and has been ranked among the top 10 retirement spots in the U.S. In fact, one in five residents are Northerners who head down to Florida to avoid their unbearably frigid winters.

Mermaid sightings by sailors, when they weren't made up, were most likely manatees, also known as sea cows. During his first journey to the Americas, Christopher Columbus caught a glimpse of three "mermaids", later writing that "they are not so beautiful as they are said to be, for their faces had some masculine traits."

Cape Coral Bridge opened for traffic on March 14, 1964, with one lane in each direction. It was the only link between Fort Myers and Cape Coral until 1997, when the Midpoint Memorial Bridge opened just north of the Cape Coral Bridge on the Caloosahatchee River.

The city's first mayor took office on December 3, 1970. Paul L. Fickinger was elected by a unanimous vote of the new Cape Coral City Council. "We had no money and no departments and no city personnel," Fickinger later recalled. The city legally could borrow up to $500,000 to get started, Fickinger said, "and we eventually borrowed $350,000 which we turned right around and invested at a higher interest rate than we were paying." The first ordinance passed by the council included an ordinance which would allow the city to receive its share of the state cigarette tax money. "That first cigarette tax payment gave us about $60,000 in operating cash, and we never did have to touch our investment."

Beware the Caloosa Spooklight. Locals say that after the sun sets, supernatural forces come out to play in the form of a series of glowing lights that appear at the intersection of Caloosa Parkway and Old Burnt Store Road. Some have suggested that origin of the lantern-like glow could be traced back many thousands of years to the ancient Caloosa empire.