The village was established in 1880 on the proposed line of the Missouri Pacific Railroad from Kansas City to Omaha.

The town was originally named Berlin; many of the early inhabitants were German Lutherans.

[3][4] The entry of the United States into World War I was followed by anti-German sentiment, which extended to a town that bore the name of Germany's capital.

A 1918 series of fires that destroyed a block of the town's main street was attributed to anti-German crusaders.

In October 1918, less than a month before the war's end, the town's name was changed to its current Otoe.

[5] Passenger rail service to Otoe was discontinued in 1932; despite this setback, the town continued to grow, reaching its maximum historical population of 298 in the 1940 census.

In 1958, the high school was closed; in the 1960s, the railroad line through Otoe was abandoned.

[3][4] According to the United States Census Bureau, the village has a total area of 0.16 square miles (0.41 km2), all land.