The fort was built at the direction of Major General "Mad Anthony" Wayne in the second week of August 1794 at the confluence of the Auglaize and Maumee rivers.

It was one of a line of defenses constructed by American forces in the campaign leading to the Northwest Indian War's Battle of Fallen Timbers on August 20, 1794.

The name was derived from a declaration by Charles Scott, who was leading a band of Kentucky militiamen in support of Wayne, that: "I defy the English, Indians, and all the devils of hell to take it.

Before and during the Battle of Fallen Timbers, Wayne ordered the destruction of all Native American villages and their crops within a 50-mile (80 km) radius of the fort.

Fort Defiance served as a reference point for defining the boundary line of land cession in the Treaty of Detroit in 1807.