The region where Águas Belas is located was originally inhabited by the Tupiniquim, who were expelled by the Carnijó tribe. The first Europeans arrived around 1700. Until 1904, Águas Belas was a district of Buíque.
The name "Águas Belas" (Portuguese for "Beautiful Waters") originated from the commentary of a judge who was visiting the city and was impressed by the excellent quality of the water in the town.