The history of Napanee began with the settlement of the United Empire Loyalists following the American War of Independence. In 1785, a saw mill was built on the river near the falls and a year later, a grist mill. By 1830, lots had been surveyed between East and West Streets, and Water and Thomas Streets. Napanee boasted almost two dozen buildings and was slowly developing as a port, exporting timber, grain and potash.

In 1852, Napanee changed from a hamlet to a police village. Becoming a police village meant it could tax the community to pay for the services of a constable. In 1855, the village was incorporated as an independent municipality. When the Grand Trunk arrived in 1856, Napanee's economy gained impetus and, with its resulting growth in size and importance became the County Seat for Lennox and Addington County in 1863.

Due to an abundance of water power, Napanee experienced its greatest growth during the period of industrial expansion between 1870 and 1880. The added prosperity of the merchants and industrialists resulted in the construction of many residences that today, give Napanee its rich architectural heritage.

By 1900, Napanee was a quieter place with a static population of civil servants, officials, merchants and retired farmers. Even with renewed growth during the war and post war years, the character of the town has remained virtually unchanged. Napanee has retained much of its past in the form of graceful buildings that still reflect the charm of an earlier era when the pace was slower and life was simpler.

Municipal amalgamations in 1998 expanded the old town to The Town of Greater Napanee, including the original Loyalist settled townships of Adolphustown, Fredericksburgh and Richmond.