The old town stands on an island made by the river Liri, which at the Boncompagni-Viscogliosi castle divides into two arms and makes two falls of about thirty metres each. The first is the Cascata Grande, some twenty-seven metres high: it is one of the very few waterfalls in Italy — with the one at Nepi — to fall inside the historic centre of a town. The other, the Valcatoio, is less spectacular because its water is diverted to feed a power plant. The name comes from the island: the first recorded form is Insula Filiorum Petri, the island of the sons of Peter, gastald of Sora, and a document of 1004 already mentions a Colle dell'Isola. For centuries the place was simply Isola, sometimes Isola di Sora, since it stayed tied to the neighbouring city until the Napoleonic age; after unification it became Isola presso Sora in 1863 and took its present name only in 1869.
In 1579 pope Gregory the Thirteenth bought the fief of the duchy of Sora from the Della Rovere to give it to the new duke Giacomo Boncompagni, his son: for many years Isola was the dukes' seat and its castle the chief administrative centre of the duchy. In May 1799 a massacre took place in the church of San Lorenzo Martire: more than five hundred people who had taken shelter there were killed by the revolutionary army. Then came paper. In the second decade of the nineteenth century Carlo Lefebvre set up the first mills here, and between 1821 and 1841 many more rose in the Liri valley, most of them at Isola: from a small rural centre the town became a first-rank industrial pole, and they called it the Manchester of Italy, but also the little Paris, for the great number of French — from Paris and Lyon — who came to live and work here. Among the families that settled were the Montgolfier, paper manufacturers. Beside the paper mills came felt works, a factory of high-quality wallpaper and wool mills, the first founded in 1805 by Clemente and Vittorio Simoncelli; and thanks to the power stations on the river, at the beginning of the twentieth century Isola was one of the very few towns in the area with electricity for public and private use. Since 1988 it has hosted the Liri Blues festival, free from its first edition, and in 1997 it twinned with New Orleans.