The name "Dilasag" was divided into two syllables. The prefix "Di" in the Native Language means "abundance", added to the word "lasag" which means "meat". The coined word "Dilasag", however, does not only mean abundance of meat in the place but also refers to extreme bounty or over sufficient supply of forest products, marine or other aquatic products and minerals, including the Yamashita treasure believed to be buried along its coastal areas.
In the early 1924, a group of settlers from the Province of Tarlac arrived to Casiguran, which is now the adjacent Town of Dilasag. Finding the natives unfriendly to them, these new settlers ventured to move along the coastline going north and settled finally to what is now called Dilasag. The place is considered habitable, because the Native Dumagats in the place were friendly. Later, many more families came making the place a community. This community was soon recognized by the Local Chief Executive of Casiguran, formerly a Municipality of the Province of Quezon. It was declared a Sitio of barangay Culat and eventually a Barrio of Casiguran in consideration of its rapid progress and development. In 1959, Congressman Enverga introduced House Bill No. 2863 in the House of Representatives, resulting to the approval of Republic Act No. 2452 on June 21, 1959, making Dilasag a Municipal District, which was separated from Casiguran.
The town of Dilasag offers a wide range of tourism and adventurous activities through its countless natural wonders. Coastal areas serve as a haven for white sand beaches and fresh sea foods. With its mountainous terrain, Dilasag is also rich in natural resources and provides an ideal venue for trekking and mountain-climbing.