Rute was founded by the Moors and there are the ruins of an old fort from this time period. In 1315 Prince Pedro conquered the town. The town then became Moorish again in 1323 until 1341, when Alfonso XI made it part of his reign. Later the Moor reconquered the town. During the time of King Juan II, the town was conquered by Sanchez de Barrionuevo and the town was repopulated by Christians from Segovia. During the 17th century the brandy industry started in the town. The poet Rafael Alberti lived in the town in 1926.
The main industry is the production of olives and olive oil. During the Christmas season the town is famous for producing sweets, such as chocolate, marzipan, and turron. Many tourists from all over Andalusia visit the town with their children to see the exhibits of figures and buildings made of sugar or chocolate. The town has been making sweets since the 17th century. Today the town also produces anis liquor.