Croton-on-Hudson was formally incorporated as a village in the Town of Cortlandt in 1898. Croton-on-Hudson’s colonial-era history dates back to the 17th century and archaeological evidence indicates that it was populated by Native American Indians as early as 4950 BC. The Kitchawanc tribe, part of the Wappinger Confederacy of the Algonquin Nation, was native to the area. The Kitchawanc called the marsh separating Croton Point from Croton Neck "Senasqua," a name later used for the park further north. Croton itself is believed to be named for the Indian chief of the Kitchawanc tribe, Kenoten, which means "wild wind." A plaque on a rock at Croton Point Park marks the spot where a peace treaty was signed in 1645 between the Dutch and the Kitchawanc.

More Dutch arrived in the following decades, at first to trade and then, by the 1660s, to settle the area. In 1677, Stephanus Van Cortlandt, who later became the first native-born mayor of New York City, began acquiring land to create a manor and in 1697, a Royal Patent was issued designating the estate as the Manor of Cortlandt. The Village of Croton-on-Hudson thus evolved as an enclave of the Van Cortlandt Manor. Originally known as Croton Landing, its early Dutch residents were involved with agriculture and trade.

By the 19th century, farming, shipping, ship-building and flour and brick manufacturing had become the predominant industries, along with work on the railroad and construction of the Croton and New Croton Dams and the New Croton Aqueduct. These major public works projects in the 19th century, the railroad, the dams and the aqueduct, played a pivotal role in shaping Croton-on-Hudson’s demographic development and cemented its importance in the region. The construction of these projects brought an influx of German, Irish and Italian immigrants, who came to work and then settled with their families in the area. The influx of immigrants significantly increased the population of the Village and the surrounding areas so that by the time of its incorporation in 1898, the Village’s population had grown to 1,000 and to over 1,700 in the early 1900s.

The advent of the railroad had a large impact on the growth of Croton-on-Hudson and served as an economic engine for northern Westchester. Construction of a rail line to Poughkeepsie via Croton-on-Hudson began in 1846, when Poughkeepsie merchants advocated for an improved link to their city from New York City. In 1903, electric trains began operating out of the old Grand Central Terminal and construction began on a steam terminal at Croton Point where trains would switch over from electric to steam power to continue north past Croton-on-Hudson.

Most of the land acquired for the engine terminal was purchased from Clifford Harmon, a real estate developer, who took title to the Van Cortlandt family farm when electrification plans were announced in 1903. He stipulated in the deed to the property to NY Central Railroad that the station on Croton Point must always bear his name, hence the Croton-Harmon Station. The terminal for steam locomotives was completed in 1913, heralding a new era for Croton-on-Hudson as a railroad town. Since the New York Central rail line stopped in Harmon to change engines, it became a destination point for metropolitan area travelers. A shopping district developed around the railroad, creating a railroad village that became a focal point and source of employment in northern Westchester.

Construction began on the Croton Dam in 1837 after several water crises in New York City made clear the need for a steady supply of potable water. The project provided many jobs for Irish immigrants who had emigrated to escape the potato famines and it is estimated that at one point 10,000 laborers were working on the project. The New Croton Aqueduct was completed in 1890 and the New Croton Dam, designed to meet the ever-increasing demands for fresh water from New York City, was completed in 1907 after 15 years of Construction.

In 1932, two separate communities, Mount Airy and Harmon, were incorporated into the Village. Each area had a distinct identity that contributed to the cultural richness of the Croton-on-Hudson community. Mount Airy had remained a Quaker enclave into the 1800s but evolved in the early 1900s into a summer colony that attracted many Greenwich Village artists and writers. Poet Edna St. Vincent Millay and actress Gloria Swanson both resided in Croton-on-Hudson, and Elizabeth Duncan, sister of Isadora Duncan, founded a dance school there. Many noted members of the American Communist party lived and organized there as well. The area continued to attract writers and artists through the mid-1900s.

Harmon was founded in 1903 by Clifford Harmon with the goal of developing a rural enclave for artists, writers and musicians. The developer constructed a playhouse on Truesdale Drive, where ballets and concerts were performed, and also the Nikko Inn, which became a fashionable place for stage and government notables. Mary Pickford and Douglas Fairbanks both lived in Harmon as did writers, journalists, teachers and college professors. By the 1920s, as the railroad expanded its services, Harmon had become a residential neighborhood for railroad workers and commuters to New York City.