he prehistory of Morro Bay relates to Chumash settlement, particularly near the mouth of Morro Creek. At least as early as the Millingstone Horizon thousands of years before present, there was an extensive settlement along the banks and terraces above Morro Creek.
Morro Rock was named in 1542 by Portuguese navigator Juan Rodríguez Cabrillo, who explored the Pacific Coast for Spain. Cabrillo called the rock El Moro because it resembled the head of a Moor, the people from North Africa known for the turbans they wore. However, the dictionary definition for the Spanish word "morro" ("pebble") is also consistent with the butte-like shape of the rock, and so the term morro is frequently used wherever such a distinctive rock-like mountain is found within the Spanish speaking world.
The first recorded Filipino immigrants to America arrived at Morro Bay on October 18, 1587 from the Spanish galleon Nuestra Señora de Esperanza. 
While governed by Mexico, large land grants split the surrounding area into cattle and dairy ranchos. These ranchos needed shipping to bring in dry goods and to carry their crops, animals, and other farm products to cities. Thus, Morro Bay grew.
The town of Morro Bay was founded by Franklin Riley in 1870 as a port for the export of dairy and ranch products. He was instrumental in the building of a wharf which has now become the Embarcadero. During the 1870s, schooners could often be seen at the Embarcadero picking up wool, potatoes, barley, and dairy products.
Since the beginning of the 20th century, the town has been a center for beach holidays. Tourism is the city's largest industry. The most popular beach is on the north side of Morro Rock, north of the harbor. There are also excellent beaches north and south of the town which are now owned by the State of California.
In the 1940s, Morro Bay developed an abalone fishing industry. Having peaked in 1957, stocks of abalone have now declined signicantly due to overfishing, it remains a fishing port for halibut, sole, rockfish, albacore, and many other species for both commercial and sport vessels. The town now combines the fishing industry with coastal tourism. In addition, oysters are farmed artificially in the shallow back bay.
A portion of Morro Bay is also designated as a state and national bird sanctuary. This means it is illegal to kill or harm a bird in that portion of Morro Bay. It is also a state and national estuary. Much of Morro Bay is a state wildlife refuge where waterfowl hunting is conducted during the season and is one of the few areas in California where Pacific Brant are pursued. Recently, Morro Bay was also declared a California Marine Reserve by the California Fish and Game Commission.
Morro Bay is located at 35°22′45″N 120°51′12″W? / ?35.37917, -120.85333 (35.379043, -120.853354). Morro Bay is also the name of the large estuary that is situated along the northern shores of the bay itself. The city of Morro Bay is 20 km (12 mi) northwest of San Luis Obispo and is located on Highway 1. Los Osos Creek discharges into Morro Bay.
According to the United States Census Bureau, the city has a total area of 10.2 square miles (26.3 km²), of which, 5.2 square miles (13.4 km²) of it is land and 5.0 square miles (12.9 km²) of it (49.2%) is water.
 Morro RockMorro Rock Main article: Morro Rock
The town's most striking feature is Morro Rock, a 176 m high volcanic plug. Morro Rock stands at the entrance to the harbor, and a causeway connects it with the shore. Previously, it was surrounded by water, but the northern channel was filled in to make the harbor. The Rock, as locals call it, was quarried from 1889 to 1969. There is no public access to the rock itself because it is a reserve for the locally endangered peregrine falcon. However, the area around the base of Morro Rock can be visited. Every few years, someone is caught trying to climb the rock. Climbers risk more than fines or jail time as the rocks that form Morro Rock are loose and fall down regularly. The base of Morro Rock is littered with fallen boulders.
 Morro Bay HarborThe Morro Bay docks with Morro Rock in the background.
Morro Bay is a natural embayment with an artificial harbor constructed by the U.S. Army Corps of Engineers. It is the only all-weather small craft commercial and recreational harbor between Santa Barbara and Monterey. Morro Rock was originally surrounded by water, but the Army built a large artificial breakwater and road across the north end of the harbor, linking Morro Rock and the mainland. Some of the rock used for this and for the artificial breakwaters was quarried from Morro Rock itself. Other rock was imported by barge from Catalina Island. The bay extends inland and parallels the shore for a distance of about 6.4 km (4 miles) south of its entrance at Morro Rock.
Only relatively small craft are capable of passing the harbor channel. A large natural sandspit, augmented by breakwaters, protects the harbor from the Pacific Ocean to the west. At its northern end, remains of a bridge that used to connect the shore with the sandspit can be seen. Morro Bay Harbor's channel silts up and must be dredged every three to four years. Previously, the Shark Inlet connected the back bay to the ocean. Some have proposed reopening it to slow the sedimentation that is filling up the bay. There has also been work on reducing erosion in the Chorro Creek watershed to reduce the amount of sediment coming into the bay to form bottom layers of bay mud. Chorro Creek is the bay's largest tributary. It forms an estuary in the back bay between Morro Bay and Los Osos. The second largest tributary, and the only other significant one, is Los Osos Creek, which empties into the far south end of the back bay.
Mariners are strongly urged to seek local advice prior to making use of the channel, especially when whitecaps or wind-blown water is evident or a small craft advisory is in effect, which is very often. The United States Coast Guard regards the harbor as one of the most dangerous in the entire nation, while others put it in the top six on the West Coast of the United States. In 1995, the Army Corps of Engineering deepened and expanded the channel to improve safety. From 1979 to 1987, 21 lives were lost in boating accidents alone. However, many additional deaths have resulted from sightseers and fisherman being swept off the rocks of the breakwater surrounding Morro Rock. They often approach too closely to the waves and are caught off guard when a big wave set comes in. The slippery and jagged rocks only add to the danger. Public access to the breakwater has been revoked and those who venture beyond the signs do so at their own peril.
Coast Guard Station Morro Bay operates two small vessels. Limited transient vessel services are available. Yachtsmen may wish to contact the Morro Bay Yacht Club. A public boat launch ramp is available at the far south end of the Embarcadero.
The back bay, roughly anything south of the Morro Bay State Park Marina, is very shallow. However, there is some slightly deeper water in the channels. The largest channel continues from the bay's main channel, winding its way towards Los Osos, on the southern end of the bay. The second largest breaks off from the largest about halfway to Los Osos and takes an extremely windy route to the sandspit. A few small channels on the landward side formed by runoff meet the largest channel as well. The narrow, unmarked channels are very hard to navigate and are filled with eel grass, which can snag the boat or clog the propeller. They are easiest to find at low tide, but if the tide is too low, the boat may run aground because the channels are only a few feet deeper than the surrounding water. An alternative to searching for the channels is to cross at very high tide.
During World War II, there was a U.S. Navy base on the north side of Morro Rock where sailors were trained to operate LCVPs. The breakwater on the southwest side of the Rock was built in 1944-45 to protect the LCVPs entering and leaving the harbor. Soldiers from Camp San Luis Obispo would come to Morro Bay and practice loading into the LCVPs. Many of those men were at Normandy on D-Day.
A number of tourist attractions are found along the shoreline and the streets closest to it, especially the Embarcadero. These include a good range of restaurants and a number of parks. The combination of tourist-oriented businesses with a working fishing port and the dominant presence of Morro Rock makes an attractive waterfront.