The Lighthouse board requested $40,000 for a lighthouse in 1878 and 1879. Congress appropriated $20,000 in March 1881 and $30,000 in 1882. After a prolonged debate to acquire land, construction began in 1884. work on the foundation of the light was completed in three months, but the schooner carrying the disassembled iron tower from Jersey City sank when only two miles from the lighthouse site. Hard hat divers were used to salvage all but two pieces of the tower. First lit on August 20, 1884, the 98-foot tall iron skeleton tower closely resembles the current Cape San Blas lighthouse tower. Both towers have a central spiral staircase beginning about 10 feet above the ground.
The lighthouse showed a light from a 3rd order lens that was made in Paris in 1884. The lens used was originally intended for Anclote Keys Light but was used instead at Sanibel. The lens rotated on steel ball bearings and showed a fixed white light varied by a flash of brighter light every two minutes. The clockworks that powered its rotation had a 120-pound weight that needed to be rewound every 12 hours, but was usually rewound every four hours. two identical white keeper's dwellings, a storage house, an oil house and a wharf completed the station. The lower part of the tower was painted metallic brown, the lantern black. Almost 670 acres were reserved for lighthouse purposes on the nearly uninhabited island to provide the keepers with pasture and farming lands.
In 1893, C.W. Bryant requested some of the lighthouse's large tract of land to use for growing castor beans. the Lighthouse Board denied his request because much of the land was not suitable for farming and the Board felt other areas existed in Florida for Mr. Bryant's beans. It was a good decision since soon after head Keeper Henry Shanahan married a widow and had a house full of 13 children.
Around 1933, the characteristic of the light was changed to its current characteristic of two grouped white flashes every 10 seconds. During World War II a lookout tower was built south of the lighthouse. the lighthouse itself couldn't be used, since even with a wartime "dim out" in effect, the light from the tower would have blinded lookouts. the dwellings were already being supplied by commercial electricity, but plans to change the light from acetylene gas to electricity were stopped since standby generators were crucial to the war effort. Soon after the war, beach erosion threatened the easternmost dwelling and the lookout tower. A September 18, 1947 hurricane demolished the station's pump house and damaged the steps leading into one of the dwellings.