The Molí de Paper began operating in 1860 and over time was operated by several tenants from the nearby paper mill towns of Bañeres and Alcoy. Although, according to records, there was already an old mill called Molino de la Balsa s. XVI (next to the camí del Bocayrent) where the Molí de Paper is located.

In 1880 the mill had eight vats, three piles, two cylinders, four hammers and a six-horsepower steam engine. Booklets of cigarette paper were marketed under the brands "El Carpintero" and "El Martillo". One of the owners made negotiations with the community of irrigators of the water of the Barranc dels Molins, managing to channel the water from the highest part, the fountain of Progreso, to the mill itself and with it to promote the rotation of the installed machinery. These projects led to costly obligations, such as building the"Llavador de Dalt"at his own expense, which would end up being inaugurated in 1903. The oldest is the so-called "Llavador dels Malalts" or "Llavador de Baix"dating from 1860, was used to wash the clothes of the sick and thus prevent contaminated water from infecting the laundry of the healthy. The Molí de paper throughout its history was expanding according to the needs that were arising, the business came to less and less and the time of splendor of the cigarette paper came together with the inability to pay the boiler. The Monte de Piedad de Alcoy forced the seizure and the auction.

The production of tin toys overtook that of paper and, in 1920, the Molí de Paper ceased its intense activity in what eventually came to be known as the toy village. The building fell into disuse until the outbreak of the Civil War, when it became a shelter colony that housed a multitude of children from different parts of Spain during the three years of the Spanish Civil War (1936-1939).