Originally called the Villa Belle Rive, Byron named it the Villa Diodati after the family that owned it. The family was distantly related to Italian translator Giovanni Diodati, uncle of Charles Diodati, the close friend of poet John Milton. Despite the presence of a plaque at the Villa heralding a supposed visit of Milton in 1638, in fact the villa was not built until 1710, long after Milton's death.
Lord Byron rented the Villa from 10 June to 1 November 1816. The scandal of his separation from his wife, rumours of an affair with his half-sister, and ever-increasing debt, had forced him to leave England, never to return, in April of that year. Byron arrived at Lake Geneva in May where he met and befriended the poet Percy Bysshe Shelley who was travelling with his future wife Mary Godwin (now better known as Mary Shelley). Byron settled at the Villa Diodati with his personal physician, John William Polidori and Shelley rented a smaller house called "Maison Chapuis" on the waterfront nearby. The group was also joined by Mary's stepsister, Claire Clairmont, with whom Byron had had an affair in London.
The weather was unseasonably cold and stormy, and Mary Shelley later described the "incessant rain" of that "wet, ungenial summer". When the rain kept them indoors at the Villa Diodati over three days in June, the five turned to reading fantastical stories, including Fantasmagoriana, and then devising their own tales. Mary Shelley produced what would become Frankenstein, or The Modern Prometheus, and Polidori was inspired by a fragmentary story of Byron's, Fragment of a Novel, to produce The Vampyre, the progenitor of the romantic vampire genre.
After Byron's death, the Villa Diodati soon became a place of pilgrimage for devotees of Byron, and of Romanticism. The French writer Honoré de Balzac, who had become obsessed with the villa, had one of the characters in his 1836 novel Albert Savarus remark that the Villa Diodati is "now visited by everybody, just like Coppet and Ferney" (the homes of Madame de Staël and Voltaire respectively).