Colachel is an ancient port town, that Vasco da Gama called ‘Colachi’. Before the State re-organization in 1956, it was part of the Travancore State. After the defeat of the Dutch by King Anizham Thirunal Marthanda Varma in 1741, a victory pillar had been erected near the beach in commemoration of the victory. The town is bounded on the south by Arabian Sea. It has Pampoori Vaikal in its Western side. Nagercoil the headquarters of Kanyakumari District is 20 km away from this town in the North East Direction.Colachel was the location of the battle between the Travancore (Anglicised form of Thiruvithaamkoor) King Marthanda Varma (1729–1758) forces led by the thiruvithaamkoor nair patalam(body guards of the king) and Anantha Padmanaban Nadar and the Dutch East India Company forces led by Admiral Eustachius De Lannoy on 10 August 1741. It was the first time in Indian history that an Asian country defeated a European naval force The Dutch marines landed in Colachel with artillery and captured the land up to Padmanabhapuram, then the capital of Travancore. The arrival of Marthanda Varma from the north forced the Dutch to take up defensive positions in Colachel, where they were attacked and defeated by the Travancore forces. Twenty-eight high level Dutch officers, including Admiral D'lennoy, were captured. The defeat of the Dutch in Colachael was the turning point of the Travancore-Dutch War. D'lennoy went on to serve the Travancore kingdom for the next two decades and was promoted to the post of the Valiya kappithan (Senior Admiral) of the Travancore forces. He modernised the Travancore army, and built the Nedumkottai, a line of fortifications in the north of the kingdom, which held up the army of Tipu Sultan in 1791, during his ill-fated invasion of Travancore. D'lennoy is buried in the Udayagiri Fort, also known as Dillanai kottai (D'lennoy's fort) which is located 7 kilometres north of Padmanabhapuram (about 14 kilometres from Nagercoil).The December 2004 tsunami of the Indian Ocean caused huge devastation and damages. In Colachel, it caused the death of around 500 people. As the land near the coastline is flat and at sea level with no seawall (anti sea erosion), water travelled inland carving out new streams and estuaries. The waves were reported to be around 5m high and a run up height of 2.6m. Maximum number of casualties happened near the A.V.M. Canal as well as around the open trenches being used by the local coconut fibre industry.[2] Colachel is said[by whom?] to be the last place (southwards) which is affected severely by tsunami.

The government and several non-governmental agencies have been providing relief works for those affected by the tsunami.