Originally a Roman settlement, the town's name derives from the Latin words villa ("farm") and magna ("large" or "important"). In the Middle Ages, its name was written as Villa Magna. Several bronze artefacts from the Roman necropolis near the town dating from the 5th century BC are held in Chieti's archaeological museum, "La Civitella". After the fall of the Roman Empire, the settlement came into the possession of the Order of Saint Benedict who built the Convent of San Severino there. The convent was abandoned in the 11th century, and the land and its settlement were ceded to the Normans. By 1461 it was under the control of Ferdinand I of Naples who gave Villamagna to Chieti after which it came under a succession of local lords. Throughout the Middle Ages, the town was also subject to frequent raids by Saracen invaders which did not cease until 1566. The local legend is that the town's patron saint Santa Margherita miraculously appeared and turned back the Saracens at the city walls, an event reenacted each July in the town's main festival.
Much of the area surrounding the town is used for growing wine grapes. Villamagna's red wine received its DOC appellation in 2011.