Rathangan gets its name from 'Iomghains Rath', the remains of which still can be seen at the top of the town. Rathangan was originally within the borders of the neighbouring King's County (now County Offaly), principally belonging to the Duke of Leinster. Rathangan suffered much upheaval during the 1798 rebellion and it is said that a bitter conflict took place between the insurgents and the troops, under Colonel Longfield, who slaughtered 42 of the inhabitants and hanged twelve. Much of the present town developed after 1784 when the Grand Canal was built on its way south to Monasterevin and Athy. The town's elegant proportions come from the layout and design of houses originally built for canal engineers and the presence of the larger houses of the gentry, including the former hunting lodge of the Dukes of Leinster.

During the 14th century Rathangan was mentioned in records on account of a visit by Edward Bruce in 1315, and in 1331 because the young earl of Kildare died there; seven years later fourteen knights were dubbed there. A joyous occasion at Rathangan, in the mid-15th century, was an entertainment of brehons, poets, bards, harpers and musicians from all over Ireland on the Feast of the Assumption 1433. Margaret O'Connor was hostess to the great assembly of musicians, and when she died 'of a sore in her breast' in 1451 she was praised for her hospitality and her patronage of such public works as road and bridge building.