The territory carried a Neolithic village of shepherds, then a Messapian settlement, and under Rome a centre of moderate size. A local suggestion identifies the site with Roman Rudiae , birthplace of the poet Ennius; it is a suggestion rather than an accepted identification, and should be treated as such.

The town proper begins with a story the whole community still tells. On the morning of 14 September 1310 , Prince Filippo I d'Angiò of Taranto — brother of Robert of Anjou, who reigned at Naples — came to the Murge to see his possessions and went hunting in the wood then called bosco Rodio , north of the casale of Villa del Salvatore . He was guided by a local huntsman, Elia Marrese . An arrow was loosed at a deer drinking at a spring, and it came back. At the spot they found a Byzantine icon of the Madonna and Child , which became the Madonna della Fontana . Song and tradition put the bow in the prince's hands; historians credit the huntsman.

What the prince did next created the town. He had a church built where the icon was found, and — to bring people to it — declared the surrounding lands exempt from territorial taxes , renaming Villa del Salvatore as Franca Villa . The inhabitants of the nearby casali moved in, drawn by the franchise, and the borgo grew quickly. It was walled and towered, and in the fifteenth century given a castle.

In 1364 the casale passed to Filippo II d'Angiò, who enclosed it with walls that Raimondello del Balzo Orsini , prince of Taranto, later extended. In 1455 Raimondello's son, the more famous Giovanni Antonio del Balzo Orsini , built a great square tower — the first nucleus of what became the Palazzo Imperiali , rectangular in plan and built as a fortified castle. In 1536 Giovanni Bernardino Bonifacio , marquis of Oria and feudatory of Francavilla, added three more towers. The fief passed to the Borromeo and then to the Imperiali .

The Imperiali were Genoese. Davide Imperiale , progenitor of the Francavilla branch, bought the fief in the early 1570s — sources give 1572 and 1575 — and the family governed for eight generations, until 1782 . They are remembered as the best feudatories the fief ever had: their patronage brought nobles and artists to the town, and it is to them that Francavilla owes the Baroque character of its regular streets and its palaces. In 1573 , a year after the purchase, the order of San Filippo Neri arrived in the city.

At the end of the eighteenth century Ferdinand IV declared Francavilla a free city , ending the feudal arrangement.

And in 1864 , four years after unification, the town exchanged the name Francavilla d'Otranto for Francavilla Fontana , in memory of the icon found at the spring.