Sally's Cove is believed to be named after Sally Short who along with her children, were shipwrecked here while leaving her husband and took shelter in the cove.

One of the area's first settlers was Richard Gilley. Most settlers came from Woody Point and probably fished in the area for years before deciding to stay. The first census was taken in 1884, with a population of 9. By 1891, it had grown to 30 and by 1901; ten years later it was 59. In 1954 a road was built to the community.

When Gros Morne National Park was established, Sally's Cove was designated by Parks Canada to be resettled. By 1976, the population had declined from 430 to 188 and by 1981 to 100. Some residents refused to move, even though there were official restrictions on building and selling and inheriting homes. By the late 1980's these restrictions were removed and Sally's Cove became a park enclave community.

Community and business services in Sally's Cove are extremely limited. These businesses provide food and adventure tourism services. A number of fishing enterprises work out of Sally's Cove and their fishing stores/sheds are located along the community's shoreline/beach. Most services are found in Rocky Harbour, 19 kms south. These services include a K-12 school, Gros Morne Academy, a local site for the Tree House Family Resource Centre, a public library with public internet access – Community Access Centre, a community centre and recycling building. In addition, recreational services that are available in Rocky Harbour include – hockey arena, indoor swimming pool (owned by Parks Canada), ballfield and soccer pitch. Health care is provided in Norris Point (9 kms south). Other community services include post office, Service Canada Centre, police and fire services. Business services include hotels/motels, cottages, housekeeping units, bed & breakfasts, restaurants & take outs, charter bank, ATMs, grocery/convenience stores, craft shops, laundromats, beauty salons, fish plant and a fresh seafood market. Additional businesses and public services can be found in the Bonne Bay region, i.e. Norris Point.

Sally's Cove is an enclave situated in the center of Gros Morne National Park. Tourist and residents can enjoy a large number of park recreational activities and programs. It is a community well known for its lobster and cod fishing. While residents depend on the nearby towns of Rocky Harbour and Norris Point for education, recreation, and social facilities, there is a community center where local socials can be held.

The beaches of Sally's Cove are very popular with tourists, especially those interested in photography. The community is just a ten minute drive from the scenic Western Brook Fjords, hiking trails, boat tour and rest area.