Islay had long been an economic, political and fiscal centre for the Hebridean islands, and until the 15th century was the centre of the Macdonalds, Lords of the Isles. A charter of 1615 gave the Campbells of Cawdor possession of Islay, including a free burgh of Barony. In 1677 Sir Hugh Campbell built a tower house, Kilarrow House, at Lag Buidhe a 'beautiful stretch of velvety sward at the head of Lochindaal'. This tower house, built of local materials but with imported skilled labour, became the core of the current Islay House. The village of Kilarrow, situated on low lying ground to the south-east of the house, became the administrative and commercial centre of Islay. In 1693 Parliament granted the right to hold two free fairs at Kilarrow, of two days each annually and a general weekly market every Thursday.
The Campbells, along with many other 17th century Scottish landowners, found themselves over-burdened financially with expenses like Civil War campaigns, Crown and feu duties, and administrative and living costs for multiple residences. In 1726, the Campbells of Cawdor sold most of Islay and Jura to Daniel Campbell, the second son of Walter Campbell of the Skipness Campbells, who bought Islay with the compensation that he received after the destruction of his Shawfield estate in Glasgow during the malt tax riots. In 1737 he extended Kilarrow House, principally to house his extended family. Interested in the economic development of the island and realising the need to diversify its economic base, he encouraged the growth of the flax industry, investing considerable sums in its promotion, and attempted to diversify land management practice by offering tenants longer leases.
The origins of the ornamental designed landscape appear to date from the activities of his two grandsons. As all of Campbell's three sons predeceased him, his grandson Daniel Campbell inherited the estates in 1753 at the age of sixteen. Before taking possession of his estates in 1758, Daniel Campbell the Younger undertook the 'Grand Tour', travelling for some five years. In 1760, influenced by contemporary architectural fashion, he added the two opposite stair towers lit by Palladian 3-light windows to his house, which by then was known as Islay House. Following his grandfather's interests in diversifying the island's economy he stimulated the agricultural and fishing industries.
In 1768, during the period of Scottish renaissance and enlightenment, he removed Kilarrow village from the immediate vicinity of Islay House and rebuilt it to found the new model village of Bowmore, which was axially focused on a circular church. This enable him to continue expanding the policy planting, as well as opening up a new vista across the edge of the bay to Bowmore. He may be responsible for the construction of the East Tower, the Gothic folly picturesquely situated on Cnoc na Croiche, a grassy platform near East Lodge that served as an artillery battery during the Napoleonic Wars. It has a carved lintel with the monogram D C (Daniel Campbell) and G R (Georgius Rex). This may be a reused stone from Islay House where the main entrance was removed from the stair towers to make a new main entrance in the early 19th century. Otherwise, if original to the Tower it would date it to the 1770s.
Unlike several other highland estates, where clearances of local populations were being carried out in the name of agricultural improvement, Daniel Campbell seemed to be equally concerned with the social and agricultural improvement of the island and by 1793 Bowmore had 110 new houses. Daniel's legacy of improvement was inherited by his brother Walter Campbell along with his debts of £90 000. Having a total of 13 children from his two marriages, money was an urgent necessity and was raised through the sale of the Shawfield and Jura estates. Walter made no additions to Islay House but developed Home Farm, also known as 'Islay House Square', a range of quarters 100 metres east of the main house, to house servants and workshops, both necessary to service Islay House and manage the estate. The last houses in Kilarrow were pulled down before the end of the century and a menagerie, possibly to amuse the children, was built within some of the ruins. Traces of two of the circular cages can still be seen left of the track leading to Kilarrow cemetery.
Walter Frederick Campbell succeeded to the lairdship from his grandfather Walter Campbell in 1816 and, continuing the long family tradition of agricultural improvements on the island, undertook a major reorganisation of the farms. New villages were founded to house some of the displaced population and regular allotments laid out to support displaced tenants and house plots in the new villages.
Estate plans of 1825 show that the present day structure of the landscape was well-established by the 1820s. Woodlands had been planted: The West Tower Plantation, apart from its westernmost compartments; Rookery Plantation; West Eallabus Wood; the Islay House policies; the Claggan Strip; Gortanaloist Plantation; the Towmore Plantation and parts of Strath Plantation. The Kitchen Garden lay to either side of the main drive to Islay House from Bridgend, with an orchard where the present walled garden stands. To the southeast of the Home Farm was an extensive Flower Garden. A series of sketches by Heath, c1830 in a 'large volume of romanticised views' give the impression of the well-wooded landscape.
In the 1840s William Playfair was commissioned to re-design and extend Home Farm offices, estate lodges and cottages in a Baronial style. His work also included ornamental gate-ways and a dry-bridge over the public road. He may have advised on the laying out of the extension to the East Drive which was punctuated by a series of incidents, woodlands, open spaces, river crossings, two bridges and views of buildings and cascades. By 1850 the landscape was described as:
'Islay House or, as it is called by the natives, the White House. This mansion is surrounded, especially in front, by a very extensive and level lawn, with the ground gently rising, and well-wooded behind. The house is on a large and princely scale, the pleasure grounds and gardens extensive and embellished.' (Anderson, 1850).
In the 1840s a crisis resulting from the general agricultural depression and potato blight, led to a call for Government intervention to aid the islanders. Walter Frederick was declared bankrupt in 1847, the island was seized and his affairs were handed over to an Edinburgh-based trust. The sales particulars of the Barony of Islay in 1852 described the mansion house and designed landscape as being:
'In the best style of architecture and finishing ...surrounded with far spreading plantations; and the gardens, pleasure grounds, private drives and walks around all connected with it, are very extensive and varied, and laid out with great taste and judgement for convenience and recreation. Considerable streams, uniting in the grounds in their course to the sea, add much to their ornament and beauty'.
In 1853 the island was sold to James Morrison of Basildon Park, Berkshire, MP of Inverness (1840-7) for nearly half a million pounds. He subsequently sold the southern portions of the estate and, in failing health, handed over the running of the Islay estate to his son Charles. The Morrisons seemed to have little intention of living on Islay, but nevertheless further plantations, Victorian farmbuildings, cottages and lodges were built. The next generation of Morrisons visited the island more frequently. On Charles Morrison's death in 1909, the island passed to Hugh Morrison, his nephew. He added a two storey mock Georgian wing, designed by Detmar Blow, set back from the main front of Islay House in 1910. In 1921 some parts of the estate were sold and Islay House itself was sold in 1985.
The house and its immediate policies (the core of the designed landscape) remain in separate ownership from the remainder of the Islay estate policies.