The modern city of Setouchi was founded on November 1, 2004, by the merger of the former towns of Oku, Osafune and Ushimado (all from Oku District). Its city hall is the former town hall of Oku.
The name Setouchi is derived from Seto Inland Sea (in Japanese: Setonaikai). The city faces the Inland Sea on its eastern and southern parts. The climate is moderate. Its main industries are fishery, agriculture, pottery, and sightseeing.
Port Ushimado was a famous port till the early modern era. It served messengers from Korea to the Tokugawa Shogunate. The port is today a good spot for sightseeing and sailing. Osafune was famous for the production of katana in the 12th century under the name of Bizen Osafune (Osafune, Bizen Province). Fukuoka District, which flourished as a trade center and later a political center along the Seto Inland Sea until the beginning of the Edo period, served by the Yoshii River and the Seto Inland Sea, is also included as a part of the city. The Fukuoka Market (Fukuoka no Ichi) was recorded in the scroll Ippen Shonin Emaki, drawn in the 13th century. At the end of the Kamakura period a castle was built in Fukuoka. In the middle Muromachi period, the daimyo who governed Bizen province took this castle as their site, rebuilt and fortified it more than before. Because the Yoshii river changed its course and most of Fukuoka including the castle sank under the river, the castle was abandoned.