The Albany neighborhood of Arbor Hill had its start as a rural section of the neighboring town of Watervliet.

The state on February 25, 1815, passed "An ACT to annex the Town of Colonie to the City of Albany".

[8] Many of the workers involved in building the Erie Canal settled here in the 1820s, but by the late 19th century the area—especially the Ten Broeck Triangle section—became exclusive, catering to the new lumber industry barons.

During the administration of mayor Erastus Corning II (1942 to 1983), urban sprawl contributed to white flight, and the area lost much of its population.

The neighborhood police unit for Arbor Hill was introduced in September 1972 and funded by the federal Law Enforcement Administration Agency (LEAA), which paid for the staffing and training of 48 officers.

[10] The New Covenant Charter School was opened in Arbor Hill in 1999 as the first in the city and only the second in the state amid huge support as a means to reach minority and underperforming students.

73% of students are eligible for the free or reduced price lunch program, and 3% have limited English proficiency.