The long name began as a sales line. A promoter, Abbie Jane Hunter, put “Carmel-by-the-Sea” on a promotional postcard, and it stuck. Plain “Carmel” had earlier been used for another place on the north bank of the Carmel River, so the longer form helped tell the new resort apart.
The word Carmel itself goes back to the river. The Spanish explorer Sebastián Vizcaíno visited in 1602 and 1603, and the river is thought to have been named Río Carmelo for the three Carmelite friars who sailed with him.
The village grew from a summer colony in 1888 and a real-estate company in 1902, then became an art colony and seaside resort. It incorporated in 1916 and had 3,220 residents at the 2020 census. Its general plan describes it as a village in a forest overlooking a white sand beach.