The villages of the town effectively comprise the inner suburbs of Rutland City.

In the early 19th century, small high-quality marble deposits were discovered in Rutland, and in the 1830s a large deposit of nearly solid marble of high quality was found in what is now West Rutland.

By the 1840s small firms had begun operations, but marble quarries only became profitable when the railroad came to Rutland in 1851.

As fate would have it, the famous quarries of Carrara in Tuscany, Italy, became largely unworkable because of their extreme depth at the same time, and Rutland quickly became one of the leading producers of marble in the world.

This fueled enough growth and investment that in 1886 the marble companies saw to it that the present Rutland City was incorporated as a village, and most of the town was split off as West Rutland and Proctor, which between them contained the bulk of the marble quarries.

The town of Rutland is home to the former Diamond Run Mall and Castleton University's Spartan Arena.