Cheng Hoon Teng was founded in the 1600s by the Chinese Kapitan Tay Kie Ki alias Tay Hong Yong. During the Portuguese and Dutch eras, Kapitans were appointed chiefs or headmen of the various ethnic communities.

In its early years, besides serving the community's religious needs, the temple also functioned as the official administrative centre and a court of justice for the Kapitans.

Besides Kapitan Tay, other prominent Kapitans included Li Wei King, Chan Lak Kua and Chua Su Cheong. Kapitan Chua was responsible for rebuilding the temple in 1801 while the Kapitans and Teng Choos after him contributed towards the aesthetic and structural additions of the building.

In 1824, the British abolished the Kapitan system and the leader of the Temple, now known as "Teng Choo", assumed some of the Kapitan's responsibilities.

Subsequently, a Board of Trustees was formed to look after the temple. The pioneers included included Tun Sir Tan Cheng Lock, who also initiated the Temple’s unique incorporation under an act of Parliament {Cheng Hoon Teng Temple Incorporation Ordinance 1949}. To the locals, the temple is also known as Kebun Datok (Gods' Garden) and Kwan Yin Teng.