Ancient sources call Lefkada a Corinthian colony, possibly with participation from Corcyra. At the southwestern cape, where white cliffs drop to the sea, there was a cult site to Apollo Leucatos. The cliff was used for a form of trial known as the Leucadian leap — criminals were thrown from the 30-metre height to judge guilt or innocence by the manner of their fall. According to legend, the poet Sappho also leapt from these cliffs in despair over unrequited love, though this story is almost certainly mythological. The cape remains one of the most dramatic spots in the Ionian. During the Peloponnesian War, Leucas joined the Peloponnesian League; later, in the 3rd century BC, Agathocles of Syracuse conquered it; later still, Rome absorbed it. The battle of Actium, one of the decisive engagements of the ancient world, was fought not far to the northeast.

The Ottomans captured Lefkada in 1479 under Admiral Gedik Ahmed Pasha and held it for most of the next two centuries, with only a brief Venetian interruption in 1502-03. Under Ottoman rule the island was governed from the fortress of Aya Mavra — the Castle of Santa Maura — at the northern tip, where the entire urban population was concentrated. In 1564, during the reign of Sultan Suleiman the Magnificent, a 3-kilometre aqueduct was constructed to bring water from the island's interior to the walled town and its suburbs. A footpath ran along the top of the aqueduct and was for many years the only land access to the island from the mainland. The Ottoman traveller Evliya Celebi, visiting in 1670-71, described the walled town as a place of five mosques, a hammam, a madrasa, a caravanserai, and 200 stone houses. The surrounding suburbs held a mixed population of Muslims and Christians numbering, by some accounts, 5,000 to 6,000 people in total.

In 1684, the Venetian commander Francesco Morosini took the island after a sixteen-day siege and demolished the walled town to clear a glacis around the fortress. The surviving suburb on the island itself — known as Amaxiki — grew into the modern city of Lefkada. Venice held the island until its fall in 1797. France occupied it, then a Russo-Turkish expedition took it in 1799. Napoleon's forces returned after the Treaty of Tilsit in 1807. The British arrived in 1810 and remained until 1864, when the Ionian Islands were ceded to Greece following the accession of King George I. An earthquake in 1825 had destroyed much of the town, including the Ottoman aqueduct; the city was rebuilt in wood to reduce future earthquake damage, and much of it still has that character. In 1864 the island had around 24,000 inhabitants.

Lefkada has always drawn people from elsewhere. Lafcadio Hearn, born on the island in 1850 to a Greek mother and an Irish father, left as a child and became one of the great interpreters of Japanese culture to the West; the island named him, and it now hosts the first museum in Europe dedicated to his life and work. Angelos Sikelianos, born here in 1884, became one of Greece's major 20th-century poets and dramatists. From the resort of Nidri on the eastern coast, views extend to Skorpios, the private island once owned by the shipping magnate Aristotle Onassis. The southern cape of the island, Porto Katsiki, has become one of the most photographed beaches in the Ionian. At Vasiliki, in the south, reliable summer winds have made the bay one of Europe's favoured windsurfing locations. Lefkada's highest point, the mountain Stavrota at 1,158 metres, watches over all of it.