Alderwood is named after Etobicoke, the municipality of which it originally was a part, which is a native word meaning "place where the alder trees grow."

In 1850, Archibald Cameron purchased four farm lots of this land comprising most of the area that is now Alderwood; he built his home 'Ashfield' on what is now Beta Street.

In 1933 Alderwood became a postal village remaining in Etobicoke Township although closely connected to the independent municipalities Long Branch and New Toronto to the south, but separated by the railway.

With Alderwood remaining an area with only little commercial space and low-rise single homes, the neighbourhood experienced population stagnation and decline as the children of older residents moved out, forcing the Public School Board to close Franklin Horner Middle School and Alderwood Collegiate.

Alderwood Collegiate became a Separate (Catholic) High School, 'Fr John Redmond' which has recently moved from the dilapidated site to a new home in New Toronto.