The settlement was originally known as Butlersburg, in honour of Colonel John Butler, the commander of Butler's Rangers. The Town received official status in 1781 when it became known as Newark. Later, it changed names again, this time to Niagara. Niagara was named the first capitol of Upper Canada (now the province of Ontario), and the first provincial parliament was convened at Navy Hall in 1792 by Lieutenant-Govenor John Graves Simcoe.

The Town played a central part in the War or 1812. Later in the war the Town was razed and burnt to the ground by American soldiers as they withdrew to Fort Niagara. Undaunted by this setback, the citizens rebuilt the Town after the War, with the residential quarter around Queen Street and toward King Street, where the new Court House was rebuilt out of firing range of the cannons of Fort Niagara. In the 1880's, the Town was renamed as Niagara-on-the-Lake to avoid confusion with Niagara Falls. The central part is referred to as Old Town or Old Niagara.