Peņablanca has for its eastern boudary a long stretch of the Pacific Ocean, on its southern edge is the Pacific Ocean to Namabbalan, Tuguegarao; from the point, its western perimeter touches the eastern side of Tuguegarao, Iguig and Amulung up to the southern boundary of Baggao.

In the mid 18th century, the Spanish authorities made this town a part of Tuguegarao and it was named "Barrio de Bubug" because of the abundance of "dapdap" trees known as "bubug" in the Ybanag dialect. Peņablanca was then considered by the Spanish friars as a hunter's paradise. Its forest were excellent hunting ground, where deer, wild pigs and wild birds of various kinds abounded.

The first settlers were a group of hunters composed mostly of Ybanags from Tuguegarao. These settlers adopted the kaingin method of farming and they occupied the central part of the town now known as the Poblacion. At the later part of the 18th century, a Spanish friar was assigned to propagate Christianity in the town and suggested that this be named "Peņablanca" because of its white rocks. Peņablanca was finally made into a town on November 21, 1896 by virtue of a Royal Decree by the King of Spain.

The town is blessed with natural resources rich forest, abundant marine life in its lakes and rivers and vast fertile agricultural lands.

Peņablanca accelerated growth and development may be attributed to its being the site of the Callao Caves Resort and Park which is the premier tourist spot in the region. The cave has seven chambers and its chamber is 100 meters long, 50 meters wide and 36 meters high. Governor General Theodore Roosevelt, Jr. visited the cave in 1932. The cave is also a rich source of guano, a fertilizer useful to farmers.

Considered as its prime agricultural products are rice, corn, mongo and peanuts. Poultry and swine projects in the locality are fast progressing too.