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Chumash Indians were the early inhabitants of the valley. They called it Ojai, which some researchers say derives from the Ventureño Chumash word ʼawhaý meaning "moon" (others say it means “nest”).
The town was laid out in 1874 by real estate developer R.G. Surdam and named Nordhoff, California, in honor of the writer Charles Nordhoff. However, leading up to and during World War I, American sentiment became increasingly anti-German and in 1917, Nordhoff was renamed Ojai.
A main turning point in the development of the city was the coming of Edward Libbey, early owner of the Libbey Glass Company. He fell in love with the valley, thinking up many plans for expansion and beautification of the existing rustic town.
After fire destroyed much of the original western-style downtown, Libbey helped design, finance, and build a new downtown more in line with the then contemporary taste for Spanish Colonial Revival style architecture. The projects included a Spanish-style arcade along the main street, and Ojai’s signature bell-tower reminiscent of the famous campanile of the Basilica Menor de San Francisco de Asis in Havana.
To thank Libbey for his gifts to the town, the citizens proposed a celebration to take place on March 2 of each year. Libbey declined their offer to call it "Libbey Day", and instead suggested "Ojai Day". The celebration still takes place each year in October.