The original name of Vasai was Vesalé in Sanskrit. Under the Muslim sovereigns it was renamed to Baxay; the Portuguese christened it Bancaim, and the Marathas called it Bajipura. After it was under British rule, it was named Bassein. Finally, after Indian independence it was renamed as Vasai.

Vasai was the seat of the Portuguese power from 1534 to 1739, after which it fell to the Marathas. The Portuguese under Nuño da Cunha built a massive black basalt fort in addition to churches as they found the site to be an apposite harbour. Vasai boomed with the spice trade and the ship building industry. The salubrious climate and the burgeoning profits saw many wealthy fidalgos — blue blooded Portuguese nobles reside here in lavish villas. It later became the town where the Portuguese aristocracy sent their illegitimate sons rather than exhibit their illegitimate offspring. The floor of St Francis Church is paved with the graves of the Portuguese nobility along with their royal insignia.

The Bassein parish is the largest contributor of priests to the Bombay Archdiocese. The parish has also contributed India's only Catholic saint — St. Gonsalo Garcia.

Vasai (Bassein), on the mainland north-west of Bombay, was a large Portuguese enclave, second only to Goa, until 1739. The northern holdings of the Portuguese, including Daman and Diu, were governed from this centre. The fort and the hinterland around it were lost to the Marathas in a campaign which lasted two years and ended in complete Maratha supremacy.

The region remained primarily agricultural till the end of the '80s. The census of 1981 found the total population of this area to be less than 250,000. Vasai had a population of 34,900 and 23,303 people lived in Virar. Only one village, Agashe, had more than 10,000 inhabitants. There had actually been a drop in population in many towns and villages in the area over the previous ten years. The MMRDA was the planning authority for this region since its formation.

In 1988 the state government de-reserved this region from agricultural use, contrary to the recommendation of the MMRDA. Development began immediately with the entry of private builders. By the time of the 1991 census a 150% increase in the population of the area was observed. The towns of Vasai, Virar, Sopara and Sandor grew by 290%. The growth was entirely due to residential usage by people commuting to work in Mumbai. Many unauthorised buildings were constructed and sold, and later had to be regularised by the state government.