The first documented mention of Trassenheide was in 1786, first under the designation "mutton stable"; a large sheep stable had been established to protect herds of sheep against sudden flooding by the Baltic Sea. By 1840 there were 138 inhabitants. In 1908 the colony was named "Trassenheide". At this time tourism began. In 1928 Trassenheide was made an independent municipality. In August 1943 it was heavily damaged by a bomb attack aimed at the neighbouring Luftwaffe rocket research station in Peenemünde.
On September 4, 2008 an upside-down house was built as a source of tourism. The architects, Polish partners Klaudiusz Golos and Sebastian Mikiciuk designed the house as part of the project 'The World Upside Down' that should allow visitors a different view of every day items. Since the whole interior is upside-down and can disorient some, the house will be used purely as an exhibit.