The Cape Fear Indians lived in and around the area that is now Carolina Beach State Park, prior to European settlement. Mainly occupying the land along the Cape Fear River and its tributaries, the small tribe grew hostile to early settlers and, in 1715, participated in an uprising against Europeans in the area. The Cape Fear Indians were defeated and left the area by 1725. Artifacts of the native culture, including pottery fragments, arrowheads and mounds of oyster shells, have been found in the area.
Early attempts at colonization in the area were unsuccessful, mainly due to conflicts with the Cape Fear Indians. Pirating, common in the area during colonial times, also contributed to the struggles of early settlers. In 1726, a permanent settlement was established along the lower Cape Fear. The newly settled land became an important arena for commerce when the English crown designated the Cape Fear River as one of five official ports of entry. Agricultural and timber products, naval stores, shipping and trade formed the basis of the economy.
Sugarloaf, a 50-foot sand dune near the bank of the Cape Fear River, has been an important navigational marker for river pilots since 1663. The dune was also of strategic significance during the Civil War when, as part of the Confederacy's defense of the Port of Wilmington, about 5,000 troops camped on or near Sugarloaf during the siege of Fort Fisher.
Carolina Beach State Park was established in 1969 to preserve the unique environment along the intracoastal waterway.
The 761-acre park is located on a triangle of land known as Pleasure Island, which lies between the Atlantic Ocean and the Cape Fear River. The land became an island when Snow's Cut was dredged in 1929 and 1930, connecting Masonboro Sound to the Cape Fear River. Snow's Cut, a part of the Intracoastal Waterway, provides inland passage for boat traffic along the Atlantic coast.