The Corn Islands were originally home to indigenous cultures such as the Sumu and Kukra Indians, who (fortunately for them) did not have the sort of wealth that attracted Spanish conquistadors during the colonial era. The natives were warlike enough to drive off most attempts to contact them, and the British even knew the islands for a while as the “Skeleton Islands.”
British, Dutch and French pirates used the islands as bases from which to attack Spanish treasure fleets although they did not leave any lasting settlement. The infamous Henry Morgan was one of many pirates who used the islands as a base for raiding.
In the late seventeenth century the British became actively involved with the Miskito Indians along Nicaragua's coast. The Indian area was named a protectorate of the British Empire. Miskito Kings were educated in England and English was introduced. The Corn Islands were considered part of Miskito territory. Settlers and slaves from Jamaica were brought in to settle and develop the islands. Sugarcane and cotton were planted.
In 1894, the British formally left the Miskito area and the corn Islands, ceding the region to Nicaragua. In 1914 the islands were leased to the USA for 99 years, although the agreement was broken in 1971. The islands were to be used for a naval base to protect US interests in the area.
Before 1988, the islanders mostly lived on fishing and productiuon of coconut oil. In 1988, the islands were devastated by Hurricane Joan and many of the coconut trees were destroyed. Since then, lobster fishing and tourism have taken over as the key industries on the islands.