Loretto began as a stagecoach station known as "Glen Rock" in the early 19th century.

In 1870, a number of German Catholic immigrants settled in the Loretto area, and a new city was established shortly afterward.

Other businesses located in this district included a doctor's office, cobbler's shop, cafes, hotels, and a funeral home.

The historic downtown area began to decline following the construction of U.S. Route 43 to the east of the district in the 1940s, when its commercial activity shifted to the new highway.

Like many Southern towns, Loretto is applying for grants to help revive the older historic district.

U.S. Route 43 connects Loretto with Lawrenceburg to the northeast and the Muscle Shoals area in Alabama to the southwest.

As of the 2020 United States census, there were 1,739 people, 703 households, and 455 families residing in the city.