Caol Ila, Gaelic for 'Sound of Islay,' is named after the strait separating Islay from Jura. The first distillery was established in 1846 by Hector Henderson in a small bay north of Port Askaig ferry terminal, utilizing water from Loch nam Ban, which had previously been used to wash lead mines. The distillery occupies a stunning location on the shores of Islay, with employee housing, a shop, and even a chapel built on the hillside above. In 1863, Glasgow's Bulloch Lade & Company acquired Caol Ila, constructing a robust pier capable of withstanding 12-foot tides and the Sound's powerful currents, enabling small cargo vessels to deliver coal and barley while shipping finished whisky. The Distillers Company Limited (D.C.L.) gained controlling interest in 1927, with full ownership transferring to Scottish Malt Distillers (S.M.D.) by 1930. The group purchased a dedicated vessel to service their three Islay distilleries. A complete reconstruction occurred in 1972 when the original buildings (except for the large three-story warehouse) were demolished. The "white tile distillery"—a modern, efficient facility—reopened in 1974 with six stills, expanding from the original two. Diageo invested £3.5 million between 2011-2012, adding two more stills and increasing annual production capacity to 7 million liters of pure alcohol, cementing Caol Ila's position as Islay's largest distillery.

Caol Ila: The Waterloo Street Style & Highland Character The 'Waterloo Street' architectural style was named after the S.M.D. (Scottish Malt Distillers) engineering department's location on Waterloo Street in Glasgow. This design required distilleries to feature 6 stills, glass exterior walls, and openable windows to flood the still house with natural light and provide ventilation. At Caol Ila, this design offers spectacular views of Jura Island's magnificent scenery. The layout of the malt mill and mash house utilizes gravity, eliminating unnecessary pumps. The overall plan was both efficient and aesthetically pleasing, creating a pleasant working environment. The design was implemented under Dr. Charles Pott, Chief Engineer of S.M.D., at the following distilleries: Balmenach (1962), Caol Ila (1974), Clynelish (1968), Craigellachie (1965), Glendullan (1972), Glen Ord (1966), Glentauchers (1966), Linkwood (1970), Mannochmore (1971), Royal Brackla (1964/65), and Teaninich (1970). Caol Ila was first officially bottled by its owners in 2002 as a 12-year-old expression. Although renowned for its peaty style, the distillery produces an annual unpeated batch called 'Caol Ila Unpeated' (or 'Highland style'), which showcases the spirit's underlying fruity elegance.