Founded in 1882 by a group of Hovevei Zion (see also Hibbat Zion) from Rumania. In the following year, the village came under the patronage of Baron Edmond de Rothschild, who named it Zikhron Ya'akov - "Memory of Jacob" - after his father, James de Rothschild. Viticulture was introduced as a primary agricultural sector and a large wine cellar was built.

Zikhron Ya'akov was an important center of the secret Nili intelligence organization (see Struggle and Defense, Jewish Defense and Resistance forces, see also Sarah and Aaron Aaronson).

In the late 1930's and 1940's, Zikhron Ya'akov became a holiday resort.

In the early 1950's, the population of the moshava increased considerably as many olim settled there. From the 1960's, however, the population of Zikhron Ya'akov remained static with some 5,000 inhabitants in 1990. The economy is based on farming (mainly vineyards), industry, tourism and recreation.

In 1954, Baron Edmond de Rothschild's remains were transferred to a Mausoleum. Also buried in Zikhron Ya'akov is the labor leader David Remez, who spent many years in the village as a Halutz.