The town of Bani, founded on March 18, 1769, used to be a part of the province of Zambales. In May 1903, it was transferred to Pangasinan together with the towns of Agno, Alaminos, Anda, Bolinao, Burgos, Dasol, Infanta and Mabini because the provincial capital then, Iba, was very far and transportation was difficult.
The original name of the town was San Simon. Historical records show that the townsite was transferred from Namagbagan to sitio Almacin in 1859 due to conditions harmful to the health of the residents because of the terrain of the site and for convenience.

The transfer of the Poblacion from its old site at Namagbagan to the present site, Almacin, was also influenced by the following popular belief which has been passed from generation to generation by word of mouth:

Legend has it that the image of the Immaculate Conception, the Patron Saint of the town, then called San Simon, disappeared from the church altar. Searching by the people and Spanish authorities yielded the statue on top of the tall Bani tree located in the vicinity of the present Roman Catholic Church. The image was brought back to the church at Namagbagan, but it was continuously lost and found in the same manner. The people were then convinced to leave their homes at Namagbagan and to settle at the present site. The town was later named Bani after the tree where the image of the Patroness was found.

The territory is divided into two regions by the tail of the Zambales mountains. From Bogtong in the south, it cuts across it northward to Malimpec then sharply bends at Pintor towards Simmilia, Sobor and Zigzag, and onwards until it reaches Tambac Bay in the northwest corner of the town where it abruptly ends. South and east of this mountain range are the lowlands; north and west of it are the uplands, the region known then as the Wild West.

When Bani was still a virgin and unexplored territory, certain historical events were happening in the neighboring provinces that led to its later exploration and settlement. (1) There was the bloody border dispute between the province of Pangasinan and Ilocos which led to the formation, in 1763, of the Province of La Union from territories carved out from both provinces. Before that time the Province of Pangasinan extended up to Pindangan (later to become San Fernando) and included the port of Agoo. The people of these communities spoke the Pangasinan dialect until they were Ilocanized. (2) The occupation of Manila and Cavite by the British emboldened the Filipinos to revolt. Among the most serious of these revolts were those led by Diego Silang in Vigan who secured a large following and gained control of the Ilocos Region for a time, and the revolt, in November, 1762 of the people of Binalatongan (Pangasinan) led by Juan de la Cruz Palaris which gained headway in the important towns of Pangasinan and was not subdued until 1765. (3) The Muslim attacks which continued "partly due to the capture of Manila by the British and partly to the many other disturbances occurring elsewhere in the Philippines. The Spaniards were helpless, and the people lived in perennial terror". And, (4) "to escape persecution through forced labor and excessive tributes, very many Filipinos abandoned their villages and escaped either to the mountain or to regions beyond the control of the Spaniards".

Many of these intrepid northern people who sought to escape to "regions beyond the control of the Spaniards" and there live in peace and freedom, took to the sea in small sailboats and sampans. When they chanced to come upon the mouth of the Bani River and Tambac Bay which was barred by a shallow sandbar knee-deep at low tide, their daring and bravado pushed them farther and farther inward and westward until they reached the rapids of Don Cayo and they could go no farther. Leaving their boats to explore the raw terrain, they tested the cool and invigorating water of the stream and saw the schools of fish playing in the water and the wildlife peeping from the nearby forest, the easily available materials with which to build their future homes, and the fertile lands that would yield their golden harvest. This was the land they were looking for. They saw, they explored and they stayed.

These, then, were the first inhabitants of Bani; the Pangasinenses coming from the strife-torn communities that bordered the province of Ilocos, and the Ilocanos. In 1769, when the Governor of Zambales came to make an ocular inspection of the sitio, the residents of whom were petitioning to become a town, he mentioned the fact that the persons who gathered before him were of the Pangasinan and Ilocano clan and numbered about "300 souls" according to Fr. Mains de Lamberto who likewise came in connection with the desire of the residents for the erection of a "visita" in Bani. Their settlements around the banks of Don Cayo became the nucleus of the town. By 1762, these settlements had became a sitio, with local officials headed by Don Francisco Baltazar as "Tiniente Absolute".