Mousehole in Cornish is named "Port enis", or Porth Enys,  and in Latin Portus insulae – "The island haven", from the little island nearby.  

It was originally written as "Mosal" ( and pronounced mauzel).
Where the name came from is open to debate, some narrators say the name was derived from "Moz Hel, the maidens river, others say it was given the english name "mousehole" when the local inhabitants saw a large opening in the side of a hill, and thought it was an actual mousehole – and so the satirical engligh named it.
In 1292 a market was setup and held on tuesdays, this and various fairs ran until 1595 when the Spanish attacked and burned the village down, along with Newlyn.
In 1392 the quay was constructed, and there is still a quay today, which rings the tiny harbour and provides car parking and excellent vantage points out to sea and St Michaels mount.
In the past the main industries were fishing, mainly mackeral and pilchards. Of late pilchards have been re-invented as "Cornish Sardines", and there is still an active fishing fleet working out of Newlyn, with a few small boats operating from Mousehole harbour.
It is widely believed that the last known speaker of Cornish was a Mousehole inhabitant – Dolly Pentreath.  This was researched by Daines Harrington who toured Cornwall in 1768 to see if there was anyone in Cornwall who still spoke the Cornish Language, on his first visit he only found Dolly, but subsequent visits by other academics unearthed several people, in and around mousehole that could still speak Cornish.   The epitath on her grave reads :-
In Cornish :-
Coth Doll Pentreath cans ha Dean; 
Marow ha kledyz ed Paul plea
Na ed an Egloz, gan pobel bras, 
Bes ed Egloz-hay coth Dolly es. 
In English :-
Old Doll Pentreath, one hundred ag'd and two; 
Deceas'd, and buried in Paul parish too:— 
Not in the church, with people great and high, 
But in the church-yard doth old Dolly lie ! 
If the reports of her age were correct, then she is believed to have died in 1788.
Of the Spanish attack, Carew wrote in his "Survey of Cornwall" :-
The 23rd July, 1595, soon after the sun was risen, and had chased a fog, which before kept the sea out of sight, four gallies of the enemy presented themselves upon the coast, over against Mousehole, and there, in a fair bay, landed about two hundred men, pikes and shot, who forthwith sent their forlorne hope, consisting of their basest people, unto the straggled houses of the country, about half a mile compass or more, by whom were burned, not only the houses they went to, but also the parish church of Paul, the force of the fire being such as it utterly ruined all the great stone pillars thereof.! Others of them, in that time, burned that fisher town, Mousehole : the rest marched as a guard for defence of these firers. The inhabitants, being feared with the Spaniards' landing and burning, fled from their dwellings, and, very meanly weaponed, met with Sir Francis Godolphin, on a green on the west side of Penzance ; who that forenoon coming from his house, for pacifying some controversies in those western parts, and from the hills espying the fires in that town, church, and houses, hastened thither: who forthwith sent to all the captains of those .parts for their speedy repair with their companies; and also sent by post to Sir Francis Drake and Sir John Hawkins (then at Plymouth, with a fleet bound for the Indies) advertisement of the arrival of these four gallies, and of their burnings, advising them to look to themselves, if there were any greater fleet of the enemies at sea, and to send west, with all haste, what succours by sea or land they could spare. Then Sir Francis Godolphin advised that weak assembly to retire into Penzance, and to prepare it for defence, until the coming of the country forces that he had sent for. But they, finding themselves in number something above a hundred, wherein were about thirty or forty shot, though scarce one third of them were serviceable, insisted to march against the enemies, to repell them from farther spoils of their houses; but while they were marching towards them, the Spaniards returned aboard their gallies, and presently removed them farther into the bay, where they anchored again, before and near a lesser fisher town, called Newlyn."
Following on from the invasion, only one house from Tudor times remains in Mousehole, it is the old mansion house of the Keigwin family, which is now a private residence, and formerly the "Keigwin Arms", a temperance inn.
References: The History of Cornwall, compiled by Fortescue Hitchins esq and Samuel Drew
A genealogical and heraldic history of the commoners of Great Britain By John Burke