The village was named after John Montagu, appointed as Colonial Secretary of the Cape in 1842. An exceptionally able and conscientious young man, he had the intelligence and imagination to envisage the potential of the Cape Colony. To unlock the hinterland, he built a road across the sandy Cape Flats and, using pioneering road engineers, convict labour and expert stone masons, built passes through the mountains.
In the 19th century the only entrance with through Cogmanskloof and during the passage through the kloof, the river had to be forded eight times. The first erven were sold in 1851 and the Dutch Reformed congregation was established in 1854. The tunnel was completed in 1877 and a decent road soon followed.
Joubert House, built in 1851, is believed to be the oldest dwelling in Montagu and depicts the lifestyle of the 19th century. The outbuilding of Joubert House was supposedly the first prison in Montagu. The Montagu Hotel was built in 1875 and was the first hotel in town. Mimosa Lodge started as a simple, single story farmhouse with a thatched roof and was later converted into a double storey house which provided the only other lodgings apart from the hotel. In its time it has served as a school boarding house, and old age home and a brothel – all summarised in lodging!
The date of the discovery of the hot springs cannot be determined as they had been used by the native inhabitants for healing for thousands of years. But in the time of the pioneers, one had injured his hand and due to regular bathing in the waters it healed miraculously. The word soon spread and the springs were then, as now, visited for health and relaxation reasons.