It is said that Libagon got its name from a small depression of the ground called libaong. Spanish authoritties mistook the reference to the ground fault on the land being tilled as the name of the place. It has since been known by that name, Libagon.
A barrio of Sogod until 1884 when Domingo Espina was elected Municipal Captain and held office in Labagon aas Sogod del Norte. In 1901, Nicolas Idjao under American Military Government of Leyte was appointed as Municipal Mayor until 1904 when Ladislao Deceteceo of Consolacion(then a barrio of Libagon) transferred the seat of government to Consolacion (Libagon was made a barrio). In 1913, Mariano Espina, a councilor during the Decenteceo term, succeeded in converting Libagon a town, himself as its first Municipal President.