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The explorer Henry Hudson arrived in the area of Watervliet around 1609. The area was first settled in 1643 as part of the Rensselaerswyck patroonship, under the direction of Kiliaen van Rensselaer. In 1710, Derrick van der Heyden operated a ferry from the Bleeker Farm (near 16th Street) across the Hudson River to Troy. Troops during the Revolutionary War used this ferry in 1777 on their way to Bemis Heights and Stillwater for the Battle of Saratoga. In 1786, a second ferry was started at Ferry Street (today 14th Street) over to Troy. The town of Watervliet was founded in 1788 and included all of present-day Albany County except what was in the city of Albany at the time. Because so many towns had been created from the town of Watervliet, it is regarded as the “mother of towns” in the county. In 1816, as the first post office was erected, corner of River and Ferry streets (Broadway and 14th Street), it took the name Watervliet.

The location of the future city was taken by the village of Gibbonsville (1824) and its successor West Troy, and the hamlet of Washington (later Port Schuyler). The farm owned by John Bleeker, stretching north from Buffalo Street (Broadway and 15th Street) to the farm owned by the Oothout family near 25th Street was purchased by Philip Schuyler, Isais Warren, Richard P. Hart, Nathan Warren, and others in 1823; they named it West Troy. Gibbonsville was the farm of James Gibbons (which he purchased in 1805), which stretched from North Street (8th Street) to Buffalo Street (15th Street). Washington was settled sometime before 1814 and was the area south of Gibbonsville and today the area of Watervliet south of the Arsenal; it became known as Port Schuyler in 1827. Although Gibbonsville and West Troy sat side by side (West Troy lying on Gibbonsville’s northern boundary), there was a rivalry between the two and each named and laid out their streets with no regard to the street names and grids of the other. In 1824 Gibbonsville became incorporated as a village, and in 1836 this was repealed when West Troy became incorporated as a village including Gibbonsville and Port Schuyler; and in 1847 the Watervliet post office changed its name to West Troy. In 1830, Gibbonsville had 559 people, West Troy 510, and Port Schuyler 450.

In 1865, present-day Watervliet was included in the Capital Police Force within the Troy District. This attempt at regional consolidation of municipal police failed and in 1870 the West Troy Police Force was organized.