The village was established in 1980 as part of the "Lookouts in the Galilee" plan, with residents initially living in prefabricated homes imported from South Africa. It was originally named Mitzpe Ziv after Har Ziv, the mountain on which it was built. It was later renamed Mitzpe Hila.
Katyusha and Grad rockets fired by Hezbollah in the 1990s landed in the village, as did more rockets during the 2006 Lebanon War against Hezbollah. Otherwise it is a popular retreat for "internal tourism": Israelis seeking bed and breakfasts or rental cabins.
