In 1956, Cher Yam Tiamnn and her husband Lim Choo Ngee began selling stir-fried crabs mixed with bottled chilli and tomato sauce from a pushcart. This was an improvised recipe; the original one did not involve bottled chilli sauce. A successful business selling this dish prompted the establishment of a non-mobile restaurant situated in Palm Beach.
In September 2009, Ng Yen Yen, Malaysia's Tourism Minister, controversially claimed that, among other dishes, that "Chilli crab is Malaysian", accusing "other countries" of "hijacking our food". Evidence supporting her claim has yet to be put forth.