The area of Zushi has been inhabited since prehistoric times, and numerous Kofun period and Yayoi period remains have been discovered. During the Heian period, it came under the control of the Miura clan, and during the Kamakura period formed part of the outer fortifications for Kamakura. The port of Kotsubo is mentioned frequently in the Azuma Kagami. The name 'Zushi' has been written in many different ways, including 豆師・図師・厨子・豆子. The term "zushi" itself means a street, an alley or an intersection and came to the Kantō region from Kyoto. One of its first appearances is in a Hōjō clan document as 豆師. During the Edo period, along with most of eastern Sagami Province, the area was tenryō territory under direct control of the Tokugawa shogunate, and administered by various hatamoto.
In the April 1, 1889, cadastral reform after the Meiji Restoration, Tagoe Village within Miura District Kanagawa Prefecture was created through the merger of six local hamlets. Development of the area was encouraged by the opening of the Yokosuka Line railway on June 16, 1889. Tagoe Village changed its name to Zushi Village on April 1, 1924; however, on April 1, 1943 it was annexed by Yokusuka city. Zushi regained its status as an independent municipality on July 1, 1952, as Zushi Town. City status was gained on April 15, 1954. Zushi developed as a resort area in the 1960s, with the opening of Zushi Marina in 1967. In the mid-1990s, the city was the center of a political controversy involving the creation of a housing area for the United States Navy at Ikego, the site of a former Imperial Japanese Navy ammunition depot, to support the expansion of nearby Yokosuka Naval Base.