Palm Valley was established around 1901 and named for the abundance of palm trees in the area. It was founded on land once owned by 18th century rancher Don Diego Espinosa and known as Diego Plains. Although the area remained primarily agricultural, many residents supplemented their income by harvesting palms for Palm Sunday church services. They transported the palms to markets in northern states via the railroad and the canal, with the main shipping dock located at the foot of the Palm Valley Bridge. According to 1930 census records, 63 people lived in Palm Valley, and by 1940, 3501 people lived in the area. The increase in population was due in part to the opening of the Ponte Vedra Beach Resort and improvements to the Intracoastal Waterway. During prohibition, Palm Valley was known as a moonshine distilling center because of its prized palmetto berry spirits.