Distant from the best fishing grounds further out the Bay, no settlement was recorded at Pilley's Island until the opening of a pyrite mine in 1887. Some early boatbuilding had taken place at Spencer's Dock, to the west of Pilley's Island Harbour. The island is thought to have been named for one of the seasonal visitors. In 1899, the mine went into trusteeship. Three years later, it was reopened by the Newfoundland Exploration Syndicate. The mine closed permanently in 1908 when it was discovered that a large fault had displaced the main ore body. Though the community lost its major employer, the town survived as a fishing and lumbering community. Its population, which was 699 in 1901, declined to 405 by 1945.