The Neutral Indians lived in the area, due in part to the ready availability of flint and chert from outcroppings on the Onondaga Escarpment.

The original settlement, known as Gravelly Bay after the shallow, bedrock-floored bay upon which it sits, dates from 1832 and was renamed after Sir John Colborne, a British war hero and the Lieutenant Governor of Upper Canada at the time of the opening of the (new) southern terminus in 1833.

Ever since the first liner emerged from the canal in 1833, the presence of the Welland Canal, which effectively bisects the city, has been the major determining factor in the city's template of growth. Supplying goods to the camps for the labourers who worked on the first canal, ship repair and the provisioning trade, was, and still is, an extensive part of Port Colborne's economy.

In 1918, Port Colborne was officially declared a town. In the succeeding decades of steady growth, the Village of Humberstone and the Town of Port Colborne continued to grow towards one another geographically and this validity was officially recognized in 1952 with their amalgamation. In 1966, Port Colborne was officially accorded the status of 'City'.