It is likely that the castle of Fagagna arose at the beginning of the 10th century as a fortification of a simpler defense erected to stem the invasions of the Hungarians. The area, inhabited since the 1st century AD and with the parish church of Santa Maria Assunta dating back to the 5th-6th century, but mentioned in chronicles from 1247, is cited for the first time in 983 in a list of castles donated by Emperor Otto II of Saxony to the church of Aquileia. The other manor, that of Villalta, was mentioned starting from 1216. Borgo Paludo and Borc di Piç, nuclei of the free Community established by 1420, are known from 1364.

The name is based on the Latin fagus, beech (from which Faganeu and then Fagagna), in reference to the woods that once covered this part of Friuli.