The City of Bayugan was formerly a Sitio of Barangay Maygatasan, Municipality of Esperanza. Several versions came out on how the Sitio got its name. First, the place was located along the river, which served as the pathway of the natives going to Esperanza. “Bayugan” is a Manobo term for pathway; since then, the natives called the place Bayugan. Another version states that “Bayug” trees grew abundantly in this place. It was also believed that the natives used to make this place their meeting spot, and that means of gathering the inhabitants was by knocking on a hollow piece of wood, which they termed the “Bayug.”

In 1948, the Department of Public Works and Highways conducted a survey for a national highway that would connect Butuan City to Davao City. Simultaneously, the Bureau of Lands surveyed the places that would be traversed by the proposed road. Possible townsites were identified, and among them was Barangay Maygatasan. However, the National Highway passed through the Sitio of Bayugan instead of Barangay Maygatasan. Migrants started settling in the Sitio of Bayugan, thus prompting the transfer of the proposed townsite.

In the early part of 1960, the inhabitants, led by Mr. Jose Joson, passed a resolution creating the Sitio of Bayugan into a regular barrio. In April of that year, Barangay Bayugan was inaugurated with Joson as the Teniente del Barrio. Brought about by the construction of the National Highway which traversed the place, business activity sprouted rapidly in the area.

A year later, Barangay officials led by the late Sergio Mullaneda worked out the creation of Bayugan into a regular municipality through the assistance of Governor Democrito O. Plaza, Governor of Agusan. By virtue of Executive Order No. 440 of the late President Carlos P. Garcia, the petition to create the municipality of Bayugan was granted on August 6, 1961. Mr. Mullaneda, the first appointed Municipal Mayor of Bayugan, assumed office on August 6, 1962, during the term of President Diosdado Macapagal.