This former town was founded officially in 1793 and was one of the oldest European communities established in present-day Ontario along with Windsor (1749), Kingston (1780), St. Catharines (1787–89), Grimsby (1790), Niagara-on-the-Lake (1792) and Toronto (1793).
By 1823, due in large part to its easily accessible water power located at the juncture of already existing historical trading routes, Ancaster had become Upper Canada's largest industrial and commercial center. Additionally, Ancaster had at that time attracted the 2nd largest populace (1,681) in Upper Canada trailing only Kingston (population 2,500), but surpassing the populations of nearby Toronto (1,376) and Hamilton (1,000). After this initial period of prosperity beginning in the late 18th century, sudden significant water and rail transportation advancements of the early 19th century would soon better benefit Ancaster's neighbouring towns situated closer to the Lake Ontario waterfront. Stationary steam engines for industries were also being rapidly developed in the 19th century that would eventually make Ancaster's water powered industries less vital. As a result, after the 1820s, Ancaster's influence during the remainder of the 19th century would begin to wane.
From the late 19th century Ancaster's population would remain static until 1946 when new subdivisions around the village were established. The population expanded further with the completion of the Hamilton-Ancaster section of Highway 403 in 1968 and the introduction of sewer systems in 1974. After 1970, its population essentially doubled from 15,000 residents to its present-day 33,000.