[3] The town was founded late in the 19th century by affluent African Americans from Washington, D.C., and Baltimore, looking for a summer retreat on the Chesapeake Bay.

The town's incorporated status gave it a unique standing in empowering it to maintain its own police force.

Celebrities with homes there have included historian and author Alex Haley, actor and comedian Bill Cosby, and tennis champion Arthur Ashe.

Street names in the town include Crummell, Dunbar, Henson, Augusta, Douglass, Langston, and Washington, which were chosen to honor leading African Americans.

Charles Douglass was a retired military officer who served with the 54th Massachusetts Infantry Regiment of the United States Colored Troops during the American Civil War.

After being turned away, Maj. Douglass decided to buy beachfront property directly south of Bay Ridge and sell lots to family and friends.

[4] Maj. Douglass bought a 40-acre (160,000 m2) tract with 500 feet (150 m) of beachfront on the Chesapeake Bay from Daniel Brashears, a Black farmer and waterman of Anne Arundel County, and turned it into a summer enclave.

Robert Terrell, the first Black municipal court judge in Washington, DC, and his wife, activist and civic leader, Dr. Mary Church Terrell, built a home, "Villa Aloha," in 1915 on the property they purchased in 1893, which was next door to the Douglass Summer House.

The guest house, which was built by George Bowen in 1902, was a very popular site for lectures, discussions, and informal gatherings.

The hotel, which was built by Richard Francis Ware in the 1920s, was a popular spot for Saturday night dances and a meeting place for church groups.

In the September 18, 1968, edition of The Evening Sun (of Baltimore, Maryland), Highland Beach is described as a "44-acre retreat of 52 clapboard, shingle, and stucco cottages that date back to 1894 - plus 1,000 feet of waterfront where no pets or picnicking are allowed."

According to Dr. Henderson, poet Paul Laurence Dunbar wrote "Ships that Pass in the Night," one of his most famous poems, while visiting Highland Beach.

The residents are proud and protective of their town's heritage,[7] established over a century ago by people determined to overcome the prejudices of their post-Reconstruction times.

The author described the development of Highland Beach as part of the emergence of a niche market in African American planned vacation communities.