Allacapan is situated in the northwestern periphery of Cagayan, boarding lower Kalinga-Apayao. It has its beginning as a small village in the jungle vastness, inhabited by Negritoes. Daring Ilocanos, mainly from Ilocos Sur, discovered it in quest for greener pasture, and eventually dominated the place.

Allacapan was founded as a municipal district of Tawit, Mountain Province, in 1926. It was ceded to Cagayan in 1928, and finally became a regular municipality in 1945 by virtue of Commonwealth Act No. 590 authored by Congressman Miguel Pio.

The history of Allacapan has a series of existing episodes and transitions. During the Japanese occupation, the Japanese forces established a garrison in the heart of the community from where echoed moars of torture inflicted upon prisoners of war, most often, innocent civilians. Later on, the Japanese burned the municipal hall, including the school building in the old site of Daan-Ili. The incident aggravated the fear of the civilians and they fled to the mountains.

After liberation, some disgruntled ex-Army men who where not satisfied with their backpay checks took to the hills with their rifles and joined the underground movement. Allacapan then became a hotbed of the Huks (HUKBALAHAP or Hukbo ng Bayan Laban sa Hapon). Their atrocities resulted in the kidnapping of then Mayor Agustin Gorospe in September 1951, the burning of the newly constructed town hall, and the looting of the local treasury.

Destiny shaped its own course for Allacapan. The construction of the highway from Magapit, Lallo to Bangag, Aparri traversing Allacapan and the opening of the Magapit Bridge to traffic, facilitated mobility of trade and commerce. Allacapan suddenly became a local point. It is now very accessible from all points and is fast becoming an urban community.

How Allacapan got its name? In his continuing saga, the curiosity of Francisco Umengan, an ex-municipal president from Aparri, was aroused to the point of annoyance by the skittering of dried leaves heaped within the vicinity. On his inquiry about the significance of the noise, his Negrito guide told him "alla-appan" meaning "trap." Umengan then named the place "Allacapan" and the name struck to the present.