The first European settlement in the area that is now South Daytona was known as "Blake." The first post office opened in 1878 and the first train arrived in 1886. Within 10 years, that railroad line extended all the way south to Miami and business around those tracks really picked up. A railroad station was built at Big Tree Crossing to handle the fruit and vegetables that were being shipped from the area.

In 1926, Daytona, Daytona Beach and Seabreeze merged to form what is now Daytona Beach. Then the city fathers of Daytona Beach started annexing all the nearby territories and settlements in an effort to expand the tax base and raise taxes in those areas. The residents of Blake hired attorneys and fought it out in the courts, eventually breaking away from Daytona Beach in 1938 and beginning to set their own course as a municipality (the Town of South Daytona). As an incorporated municipality, the town was in a position to request federal financial assistance for the expansion of streets, utilities and such and was soon the second town in the area (after Daytona Beach) to install a municipal sewer system. The City of South Daytona was incorporated in 1951.

Since 2000, the population of South Daytona has dropped about 7%.