The original township of Scugog was originally divided between Reach and Cartwright townships in Ontario County and Northumberland and Durham County, respectively. When Lake Scugog was created by a dam in Lindsay in 1834, flooding created an island known as Scugog Island. The island was separated from Reach and Cartwright to form Scugog Township in 1856. In 1872 George Currie built a grain elevator which is currently Canada's oldest grain elevator. The new township was part of Ontario County.
According to Alan Rayburn's Place Names of Ontario, the name Scugog is derived from the Mississauga word sigaog, which means "waves leap over a canoe." This refers to the creation of Lake Scugog. Other sources indicate that it is a native word meaning swampy or marshy land.
The creation of the Regional Municipality of Durham in 1974 resulted in municipal restructuring of the various townships in Ontario County. The current township of Scugog was created through the amalgamation of the original townships of Scugog, Reach and Cartwright and the town of Port Perry.