The Town of Manchester-by-the-Sea was included in a grant of land to the Massachusetts Bay Colony made in 1629 by Charles I who signed the charter in that year. By June of the same year the first ship, the Talbot, dropped anchor in Manchester Harbor carrying settlers who were attracted by "the promise of a safe harbor, streams of water, the sheltering hills and an abundant opportunity for building fishweirs, which offered an almost ideal spot for the planting of a new settlement." Prior to the settlers’ arrival, the Agawams, a tribe of the Algonquins, inhabited all of eastern Massachusetts. The chief, or Sagamore, who ruled in this region was named Masconomo. He was a friendly, peace loving man whose tribe was decimated by a plague soon after the arrival of the settlers. Manchester became "Manchester" in 1645, when the people of "Jeoffereyes Creeke" requested and were granted the village name. Before that, the area was part of the town of Salem, and before that belonged to the Algonquin Indians. The settlers acquired land by purchase or by "peaceful possession" until 1700, when a final payment was made to the grandson of Masconomo. At that time, the Native Americans relinquished all right, title, and interest in the land then comprising this township.

Fishing and seafaring were the chief livelihoods of the early settlers. At one point the town had more than 40 sea captains commanding vessels. In the mid-1800s Manchester became a summer resort for the wealthy and well known. Presidents, princes, and ambassadors were among the many distinguished people who vacationed here. Notables from the theatrical world were attracted to the town, particularly after the opening of the Masconomo House, an elegant hotel at the corner of Beach and Masconomo Streets built by Julius Booth, brother of the infamous John Wilkes Booth. During this period, because there were many Manchesters in New England, it became vogue to call the town "Manchester-by-the-Sea." The usage so irked Dr. Oliver Wendell Holmes that he headed his letters to Manchester friends "Boston-by-the-Charles." Regardless, the custom persists today. Manchester is probably best known for its exceptionally beautiful beaches and harbor, its pleasant residential character, its numerous buildings of historical significance and its handsome estates.