The Gaelic name for the place, still used today, is Cille Chuimein. The traditional etymology traces it to Saint Cummein of Iona, the seventh-century abbot who built a church here. Other suggestions link the name to one of two Iona abbots from the Comyn clan, whose badge Lus mhic Chuimein refers to the cumin plant, or to Cill a' Chuimein, Comyn's burial place, after the last Comyn chief in Lochaber. The site mattered long before Wade arrived. In 1767, near the spot where the Benedictine abbey would later stand, locals dug up a hoard of Roman coins ranging in date from AD 79 to about AD 560. That has prompted some historians, including G. McDonalds, to speculate that a small Roman fortification once stood here under Diocletian's rule, though no clear archaeological evidence has confirmed it.

Wade originally meant to call the surrounding settlement Wadesburgh. The name did not stick. The fort, though, served as a centrepiece of Hanoverian control of the Great Glen. In December 1745, during the second Jacobite rising, 600 men from the newly formed Independent Highland Companies laid siege to the fort, which the Jacobite Clan Fraser of Lovat had taken. After a small skirmish the government troops recovered it. The next year the Jacobites returned. From 22 February to 1 March 1746, Bonnie Prince Charlie's forces besieged the garrison until it surrendered. Six weeks later, on 16 April, the Jacobite cause ended at Culloden. The fort that bore Cumberland's name had briefly fallen to the Stuarts and was returned to the Crown by the disaster forty miles to the northeast.

In 1867 the Lovat family bought the fort. In 1876 they passed the site to the Benedictine order, who established Fort Augustus Abbey on the old ramparts and added a school. The school ran for over a century before closing in 1993 amid declining enrollment and educational reform. The monks then commissioned Tony Harmsworth to design a rescue plan, which converted the site into the largest private heritage centre in Scotland from 1994 to 1998. It did not generate enough revenue to maintain the buildings. The monks left in 1998, the site reverted to the Lovats, and the Lovats sold it to Terry Nutkins, the broadcaster and animal handler. The west curtain wall of Wade's fort still stands today, complete with gun embrasures, inside the grounds of The Lovat Hotel, which began life as the local Station Hotel.

The Caledonian Canal arrived in Fort Augustus in the 1820s as part of Thomas Telford's coast-to-coast waterway. At the village the canal descends through five linked locks straight into Loch Ness, dropping boats some 12 metres in a single staircase. The sight of a narrowboat working through the flight, with the long water of Loch Ness opening out below, is one of the canal's set pieces. The village's economy is now heavily tied to tourism, with a steady summer trade from canal traffic, boat trips on the loch, and the inevitable monster industry. From 1903 to 1933 a branch railway also reached Fort Augustus from Spean Bridge, built by the optimistically named Invergarry and Fort Augustus Railway. The track is gone.

Fort Augustus has the maritime climate of most of western Scotland, with cool summers and mild winters, but its position in a deep valley makes the local weather odd. The village holds the UK's joint lowest May temperature record, recorded on a still clear night when cold air pooled in the glen floor. The same topography can produce surprisingly warm days, and Fort Augustus held the UK daily high temperature record for 16 December for almost 80 years. Among those buried in the village's Strathoich cemetery is Guy Prendergast, the British explorer and soldier; among the village's other historical sons is Alexander Fraser, who at the Battle of Stoney Creek in 1813 captured two American commanding generals on a single battlefield.