A whaling station on Beacon Island closed down in 1916. Parts of the iron slipway are still visible today. A hotel called The Beacon Isle was built on the site of the whaling station. This was replaced by the iconic Beacon Isle Southern Sun Resort which opened for business in December 1972. This building, designed by André Hoffe, has a layered atrium which pays tribute to the Guggenheim Museum of Frank Lloyd Wright. Between 1960 and 1990 Plettenberg Bay holiday resort expanded dramatically, extending along Robberg Beach ('Millionaire's Row'), and back towards the N2. During the apartheid period property within Plettenberg Bay was designated for whites only, with segregation of the beaches and toilet facilities.

 New Horizons, across the N2, was designated as a settlement area for coloured people in 1968. As the 1980s progressed informal settlements of Xhosa migrants grew up around the edges of New Horizons and in the area of KwaNokuthula which became a town.

Although Plettenberg Bay escaped most of the violence associated with the end of apartheid, the assassination of Chris Hani in April 1993 led to a protest march into the town from KwaNokuthula, during which industrial premises on the outskirts of the town were burnt to the ground. Although formal segregation ceased with the repeal of the apartheid laws, the consequences of the previously segregated property ownership remain highly visible to this day.