Labuan was part of the dominion of the Brunei Sultanate until 1846 when the Sultan of Brunei ceded it to the British. The discovery of large coal deposits and its strategic location led to the establishment of the island as an entreport on 1 August 1848. For the next 115 years, with a break of three years of Japanese military occupation, Labuan was under direct British rule.
Following the Japanese Occupation, Labuan became part of the British North Borneo colony (Sabah) on 18 July 1946. Labuan joined Malaysia in 1963 and on 16 April 1984, Labuan was declared a Federal Territory and ceded to the Federal Government.
More on Labuan History.