James Fenimore Cooper, the world-famous novelist, once wrote how Cooperstown was said to have been a favorite place of resort for the adjacent Native American nations in the Iroquois Confederacy. Cooper said the word Otsego is thought to be a compound word which conveys the idea of a spot of land at which meetings of the Indians were held. Cooper referred to Otsego Lake, on the south end of which Cooperstown sits, as the "Glimmerglass," a name still used today.

Cooperstown was founded in the late 1700s by Judge William Cooper, James' father. At that time, this area was considered the far western frontier. William Cooper arrived from New Jersey, bought a lot of land and encouraged many to settle here. Cooper's mansion was once on a site next to today's National Baseball Hall of Fame and Museum, presently a village park. Many of the stone houses that William Cooper built are still standing in the village.

In April 1807 a law was passed authorizing residents of Cooperstown to elect trustees, under an act of incorporation called the Village of Otsego. The change of name arose from party politics, and a majority of the residents, being opposed to the name, elected trustees who refused to serve until the name was changed back to Cooperstown. That finally took place in 1812.

Cooperstown, on Otsego Lake, is at the source of the Susquehanna River, which wanders through New York State and Pennsylvania before connecting to the Chesapeake Bay in Maryland, and leads to sea. It was at this source during the American Revolution that General James Clinton had the lake dammed, then broke the dam, and the flowing water carried his troops deep into Native American territory, where they subdued the Iroquois, who had been raiding and destroying white settlements.

What was called The Great Fire of 1862 destroyed most of the village, but it was soon rebuilt.

The village truly began to develop after the arrival of Edward Clark, a founding partner in the Singer Sewing Machine back in the early 1850s. Clark initially viewed Cooperstown as a summer home and built the lovely Fernleigh mansion, but over time he grew very fond of the village and took on increasing interest in its welfare, a concern that four succeeding generations of Clarks have shared. Landmarks such as the Otesaga Resort Hotel and Mary Imogene Bassett Hospital were founded by Clark's descendants. The family lured the New York State Historical Association (NYSHA) to relocate here from Ticonderoga. NYSHA then developed The Farmers' Museum, Fenimore Art Museum and Cooperstown Graduate Program in Museum Studies.

The Clarks' involvement contributed to the 1908 Mills Commission finding that Abner Doubleday invented baseball in Cooperstown. Although that has been debated ever since, it nevertheless lead to the founding of the National Baseball Hall of Fame in 1939, which made Cooperstown a national icon.

Modern day Cooperstown is dealing with environmental protection issues. Because of this, in 1999 the Glimmerglass Historic District was named, the largest such entity in the country. The founding of Cooperstown Dreams Park in 1996 and the sprawl of modern commerce in the adjacent Town of Hartwick has begun to significantly change the rural nature of the Cooperstown area.