Where schools, shopping centers and residential neighborhoods now stand, Native Americans once lived. On July 23, 1769, they were visited by a Spanish expedition under Captain Gaspar de Portola, who camped near the site of Tijeras Creek Golf Course in Rancho Santa Margarita.
On July 24, the expedition headed inland to avoid the many streams and swamps in the area. They found a large plateau area and camped that night on its western edge by a canyon, which the Franciscans named San Francisco Solano. This was on the eastern side of Trabuco Creek about three miles downstream from the present site of Trabuco Oaks.
While camped here on July 24-25, one of the soldiers lost his trabuco, or musket, a most valuable possession to any soldier. To mark this loss, the stream was named Trabuco. The name has been associated with the mesa, the canyon, and the entire area ever since. The Spaniards founded Mission San Juan Capistrano in 1776, and ruled the region until 1821, when California became part of Mexico.
The Mexican governors carved the area around the mission into three large ranchos: Rancho Trabuco, Rancho Mission Viejo, and Rancho Santa Margarita. James L. Flood and his partner Jerome O’Neill purchased the combined ranchos in 1882. The huge estate was run as a working ranch into the 1920s. In 1940, the ranch was divided, with the Flood family taking the lower portion, in today's San Diego County, with the upper portion retained by the O'Neill family. In 1942, the Navy annexed the Flood family’s portion of the ranch for use as Camp Joseph H. Pendleton.
In 1948, the O'Neill family donated 278 acres of canyon bottom land to the County of Orange for park purposes. The O'Neill family donated an additional 120 acres of parkland in 1963, the same year they founded the Mission Viejo Company and drew up plans for a master-planned community of the same name.
By the 1960s, a rural cluster of homes had been present in Trabuco Canyon for decades. The area's first tract developed homes didn't arrive until late in the decade in what would become Coto de Caza, which started out as a hunting and fishing resort. The area remained fairly remote until 1986, when the first homes in the new master planned community of Rancho Santa Margarita were sold. The economic boom of the 1980s also fueled home construction in nearby Dove Canyon, Robinson Ranch, Wagon Wheel and a handful of smaller developments. The area became better linked to the rest of the county in 1992, when extensions of Oso, Antonio and Alicia Parkways were completed.
In 1989, the people of the community of Rancho Santa Margarita established a Community Civic Association (CCA) for the purpose of providing a political voice for the community. The CCA, later known as the Rancho Margarita Civic Association (and still later as the Civic Council), briefly explored self-governance, but it was in 1995 that the RSM Cityhood Committee, a separate community organization, began the official drive for cityhood. Rancho Santa Margarita was planned to be an “Urban Village”, offering the best of two worlds: all of the elements and advantages of a small city plus the quality of life of a small village.
In November 1999, area voters opted to incorporate the Rancho Santa Margarita Planned Community and the neighboring Robinson Ranch, Dove Canyon, Rancho Cielo, Trabuco Highlands and Walden Communities. The newly formed City of Rancho Santa Margarita incorporated on January 1, 2000, and became the 33rd city in the County of Orange.
The City is a general law city and operates under the council-manager form of government. Rancho Santa Margarita is a contract city. Police services are provided through contract with the Orange County Sheriff. Fire Protection services are provided through the Orange County Fire Authority.