Historically, the first inhabitants of Santa Ignacia were Negritos, but were driven to the mountainous portion of the province when the first migrants from Ilocos, lead by a man whose family name is Madriaga, occupied the place. The new settlers called the place binaca, an Ilocano word which means plenty of cows. Up to 1845, Binaca (now Nambalan) was a barrio of Camiling. Robbers, from 1845 to 1874, plundered the barrio. This forced a petition for Binaca to become a town, with Don Felipe Cabugsa as its gobernadorcillo, in order that it could have its own police force.
A superior decree dated May 6, 1874, modified by another decree dated May 22, 1876, called for the creation of barrio Binaca into a civil town, and named it Santa Ignacia. These two decrees were approved by a royal decree dated August 13, 1880. Occasionally, the parish priest from Camiling performed spiritual service for the town.
Despite being upgraded to the status of a town, the area continued to be the target of attacks by thieves or tulisanes who stole the work animals and personal belongings of the residents. Again in 1888, robbers forced their way into Santa Ignacia, looting all they could get including the timbre del tribunal (official seal).
In 1899, during the administration of Don Manuel Briones, Presidente Municipal, a revolutionary government was established in Santa Ignacia but later, was taken over by the administration of the United States of America.
On January 1, 1914, after the intervention of the Provincial Board of Tarlac and upon the insistent demand of the people that the first Municipal Council of Santa Ignacia was inaugurated composed of Don Isidro Alviar as the Presidente Municipal; Don Eulogio Madriaga as the Vice-Presidente, and Don Santiago Aviguero, Don Pedro Guerrero, Don Silvestre Lacuin, Don Alipio Pascasio and Don Antonio Colimay as Councilors.
Subsequently, the municipality has evolved as a surging commercial town today.
Then and now, Santa Ignacia’s fertile and rich agricultural lands are its chief livelihood, which is largely based on farming. Its major crops are rice and different fruits and vegetables.
Endowed with the Ilocano tradition of pottery making, the rustic town of Santa Ignacia is well known for the production of high quality earthen pots and other terracotta products.
Beyond agriculture and terracotta, Sta. Ignacia creates itself as an emerging town of intrepid entrepreneurs and hardworking artisans. It produces fine handicrafts, sculpture, smoked fish stuffs, and the famous inangit product.