Island Harbour began life as one of the great English tide mills, the East Medina Mill. The original building was built on the site of todayís lock entrance in 1790 by William Porter, a baker from nearby Newport. At this time the Medina River was a mooring place for convict transports, and a story related in Albinís History of the Isle of Wight published in 1795 tells of an occasion when Mr Porter's workmen were rowing down to work from Newport they were taunted with being bound for Botany Bay. In this way, East Medina Mill became known as Botany Bay Mill. However, a more likely interpretation is that William Porter supplied ship's biscuits to the convict transports in the river. Just after 1790 the banks who had previously supported Mr. Porter withdrew their funding and the business was forced to close. Thomas Porter died a year later and the buildings were left empty.

During the reign of George III (1760-1820), foreign mercenary soldiers were enlisted into the British Army. At the end of the 1700's, German and Prussian soldiers along with their families were stationed at the East Medina Mill. Shortly after their arrival, a typhoid epidemic swept through the barracks, and over 70 people died who were subsequently buried in a mass grave at Whippingham Church. Queen Victoria's daughter later visited the church and on being made aware of the mass cemetery, contacted the authorities in Germany to advise them of the tragedy. This led to a plaque being placed in the church on the south wall in memory of the soldiers and their families. It is also said that there is an entry in the church parish register.

The East Medina Mill became barracks again in the early 1800s after the Napoleonic war when French soldiers were held here as POWs.

In 1799, the mill was insured by William Roach with the Sun Insurance Company under the description 'Water corn mill and storehouse communicating (East Medina Mill) and kiln in tenure of James Roach, merchant and miller, brick and tiled small part timber, £1500. Water wheel, millstones, wire machine and dressing mills, £500, totalling £2,000í. The stock was insured by James Roach under a separate policy for £500. This records a change of ownership within the first nine years of the life of the mill. The Roach family then held the mill until it ceased to work in 1939.

The mill buildings were 300 feet long, 30 feet wide and 3 storeys high. The mill part was 10 bays long and was attached to a store-house which was 8 bays long.

The store-house was ruined by a storm in 1930. An article in the County Press (18 Jan 1930) highlights the damage caused: "The most striking example of the fierceness of the gale on the Island was afforded at East Medina Mill, where a 90ft long and 30ft wide portion of the roof, was lifted bodily from the mill building and carried 40 yards before it crashed onto cottages and other buildings. At its height, the wind probably reached a velocity of at least 90 miles an hour. The scene next morning was one of almost indescribable chaos, and reminded some onlookers of the shell-shattered buildings of the battlefield."

In 1939 the Borough of Newport obtained the mill for use as a store for waste material. A large fire subsequently burnt down half of the mill and it remained derelict until 1950 when it was demolished.

During this time, in 1946 a firm called Southern Aircraft (Gatwick) leased the land to build aircraft, a project which never really came to fruition. Then in the mid 1960's a group of local people clubbed together to take over the lease from the aircraft company, building a marina which subsequently opened in 1965. Island Harbour has recently changed hands, being bought by the current owners on 2 January 2013.