In 1719, about eighty persons, chiefly from Portsmouth and Hampton, formed an association, for the purpose of securing a tract of land in the "Chesnut Country" (so called) and stationed three men upon this tract, to hold possession until they should procure a lawful title.

After considerable difficulty they obtained a grant of land, ten miles [16 km] square.

Immediately the settlement was commenced by several persons from Rye and Hampton, among whom were Samuel Ingalls, Jonathan Goodhue, Jacob Sargent, Ebenezer Dearborn, Robert Smith, E. Colby and S. Robie, who contributed largely to the permanent success of the enterprise.

On the 8th of May, 1722 the township which had hitherto been called Cheshire, was incorporated under its present name, and comprising an area of over 120 square miles [310 km2].

It may have been the first of the settlement grants by Massachusetts selected for expansion of growing populations in the seacoast.

The highest point in town is found on an unnamed hill west of Bell Hill and northwest of Harantis Lake; it has two knobs of almost equal elevation of at least 635 feet (194 m), according to the most recent (2011–2012) USGS 7.5-minute topographical map.

The area of Chester drained by the Exeter and its tributary Towle Brook lies within the Piscataqua River (Coastal) watershed, while the western edge of town drains west toward Massabesic Lake and is in the Merrimack River watershed.