Before the Castilian conquest, the territory now occupied by Arafo formed part of the menceyato of Güímar, one of the nine Guanche kingdoms into which Tenerife was divided. The aboriginal inhabitants used the springs of the Añavingo ravine and the slopes of the valley for grazing and gathering. After the island was incorporated into the Crown of Castile in 1496, the Adelantado Alonso Fernández de Lugo distributed land and water among the conquerors: grants were made in the area as early as 1503 and 1504, and in 1509 Gonzalo de Mejías transferred water and land to the Augustinian convent of the Holy Spirit in La Laguna, which channelled the waters of Añavingo and became the chief landowner of the area.

During the 16th century new settlers established themselves around hamlets such as El Aserradero and Perdomo, and the Augustinians introduced devotion to Saint Augustine. Lacking their own parish, the inhabitants travelled to Candelaria to fulfil their religious duties. Agricultural prosperity allowed a hermitage to be built between 1672 and 1690, dedicated to San Juan Degollado (the Beheading of Saint John the Baptist). At the start of the 18th century the village grew and gained a sense of its own identity: in 1738 the process to establish its own parish began.

One event marked Arafo's landscape forever: the eruption of the Las Arenas volcano, between 2 February and 27 March 1705. Its badlands forced the settlement to move northward, around the new church, which became the most populous nucleus. On 17 October 1795 Bishop Antonio Tavira decreed the creation of the parish of San Juan Degollado, independent of Candelaria. Once parish segregation was achieved, the inhabitants gained the right to elect their own officials: on 1 January 1798 Felipe Marrero became the first local mayor, and with the Constitution of Cádiz of 1812 Arafo was established as an independent municipality.

The 19th century was shaped by economic crises and an agrarian structure burdened with feudal dues; with the disentailment, the land passed into the hands of a few families, such as the Batista. After a peak of 1,849 inhabitants in 1877, emigration to the Americas and the cochineal crisis reduced the population, which rebounded at the end of the century thanks to the export of potatoes and tomatoes and improved communications.

Throughout the 20th century, Arafo took great care of its urban layout, which earned it several beautification awards and, in 1981, the Second National Tourism Prize for the Beautification and Improvement of Spanish Towns. As a culmination, the Government of the Canary Islands granted it the title of Villa (Town) in 1983. Social and cultural life revolved around its recreational clubs, led by the Casino Unión y Progreso, founded in February 1906. In 1994 major works were inaugurated, such as the Juan Carlos I Auditorium, the Conservatory and the rehearsal halls, solemnly opened by the King and Queen of Spain on 24 June 1994.

But if Arafo is known for anything throughout the Canaries it is for its powerful musical tradition, an almost unique case of a town with two rival centenarian bands. The story begins in 1860 with a children's band which, renewed at the start of the 20th century, became the Sociedad Filarmónica Nivaria; from it, in 1925, the Agrupación Artístico-Musical La Candelaria split off, debuting in Candelaria on 2 February 1926. Both, together with choirs such as the María Auxiliadora (1946), keep alive a musical identity that culminates each August in the Band Competition. Added to this hallmark are the flower-and-heather carpets of Corpus Christi, the agriculture of the midlands and the wines protected by the Valle de Güímar Designation of Origin.

Today Arafo is a municipality of just under 6,000 inhabitants that combines its neat, flower-filled historic centre, quality agriculture, an industrial estate on the coast and an extraordinary range of nature, with the Añavingo ravine and the trails that climb up to the Corona Forestal and the summit ridge, on the edge of Teide National Park.