The area at the confluence of the Hudson and Mohawk Rivers was inhabited by native Americans for thousands of years before the arrival of Henry Hudson on the Half Moon in 1609. The Alkonqian-speaking Indians Hudson encountered were probably Mahicans, an agriculturist tribe who lived in villages and had extensive regional trading networks during the Late Woodland period (about AD 1000-1600). In the 17th century Dutch traders and trappers from the Manor of Rensselaerwyck first settled in Waterford, originally known as Halfmoon. When the Dutch arrived, Peebles Island was the site of a village of Mahicans, a tribe which remained involved in local trade and warfare well into the 18th century. During the 18th century power struggle between the French and British for control of North America, and the War for Independence, the islands at the mouth of the Mohawk (Green, Van Schaick and Peebles) were sites of military encampments.

The Village of Waterford was incorporated in 1794, taking its name from the fact that there was a fording place in the river between the village and Peebles Island. River trade was initiated in the region in 1799 and Waterford, which was the head of sloop navigation on the Hudson, became a bustling port. Due to the presence of water for both power and transportation, the Hudson-Mohawk region became one of the birthplaces of the American Industrial Revolution. To move goods and travelers to the west and north of Waterford it was necessary to overcome the barriers created by the Cohoes Falls in the Mohawk River and the rapids of the Hudson. The completion of the Erie and Champlain Canals in the 1820s fostered prosperity in the 19th and early 20th centuries. Construction of the Waterford Flight of Locks in 1915 as part of the New York State Barge Canal System assured Waterford’s role in canal transport through the first half of the 20th century. The Waterford Canal Harbor project will bring prosperity to the community in the 21st century.