In 1606, Samuel de Champlain, the first European known to have explored the area, encountered the Monomoyicks, a Native American tribe of about 500 to 600 members. The topography he mapped and described is still recognizable, as are the varieties of plants, fish, shellfish, and game birds. The Monomoyicks sustained themselves with well-established farms, hunting, and fishing.

The arrival of English colonists began about 1656 when William Nickerson, an English emigrant working as a land surveyor and weaver in Yarmouth on Cape Cod made the first land purchase from Sachem Mattaquason of the Monomoyicks. Nickerson failed to get permission for the purchase (a requirement at that time) from the Plymouth General Court. As a result, the Court confiscated his land except for a 100-acre Homestead. But, after 10 to 12 years of litigation, he regained ownership. With additional purchases, he ultimately owned all of what is now Chatham with the exception of some land east of Old Harbor Road which had been reserved for the Monomoyicks. In 1664 Nickerson settled his family on the west side of Ryder's Cove.

By the 1690s, 17 families lived in Chatham, and that number slowly grew to 50 families in the early 1700s while the native population dwindled to 50-70. Before being established as a Constablewick in 1696 known as "Monamoy", the settlement had belonged to Yarmouth and then Eastham. Chatham was incorporated in 1712 and quickly organized school districts and church leadership.

(In the early 1700s)
...the outlook for the place was not considered bright. It was small in area and the General Court had refused to increase its territory. According to the ideas and mode of life at that time, it could never accommodate many settlers. Moreover, its location was thought to be unfavorable, in those times when England was almost constantly at war with France, as it was considered to be peculiarly exposed on two sides to attacks from French privateers who occasionally hovered around the coast and threw the people into a panic.

-William C. Smith, A History of Chatham, Massachusetts, 1947

Chatham's early prospects were not promising. The first 100 years of recorded history reveal a struggle to establish an economy and a stable population. Situated at the end of a primitive road from Yarmouth and surrounded by open ocean, Chatham was vulnerable. Farming yielded little beyond the needs of the residents, and fishing, the mainstay of the early economy, was often disrupted by warships, first the French and later the British. The 1750 natural closing of the entrance to Pleasant Bay forced maritime activities farther south. The French and Indian Wars and the 1760 smallpox epidemic took both men and money. By 1765 the census listed only 678 persons in 105 families.

It wasn't until after the Revolutionary War that Chatham stabilized and grew. Industries such as fish export, shipbuilding, and salt production brought life to the economy. Agriculture, fishing, whaling, and aH maritime enterprises flourished. In 1830, during the height of salt works production, the population was 2130.

In 1851 a breach of North Beach occurred affecting the stability of the fishing trade, but fishing, shipbuilding, and salt-making still occupied most of the Town's population. Some greater diversity of religious and cultural groups appeared in the years prior to the Civil War, and government services including post offices were upgraded. The population peaked in 1860 at 2,710 but dropped to only 1,300 following the Civil War.