[2] Southold was the first English settlement in the future New York State, though this is partially due to a historical technicality—the territory of New Netherland was still owned by the Dutch at the time, but Southold lay in a part of Long Island that was part of Connecticut at the time and was later ceded in a legal dispute.

English Puritans from New Haven, Connecticut, settled in Southold on October 21, 1640.

When the colony of New York was handed over to the Dutch in 1673, the eastern towns, including Southold, Easthampton and Southampton, refused to submit; the Dutch attempted to force the matter by arms, and the colonists of the towns repelled them, with assistance from Connecticut.

New York Governor Sir Edmund Andros threatened to eliminate the residents' rights to land if they did not yield, which they did by 1676.

The name Southold is believed by some to be a misspelling of Southwold, which is a coastal town in the corresponding English county of Suffolk.

Reydon is the adjoining village to Southwold in England and was the home of John Youngs' wife.

An alternative explanation is that the name refers to a "holding" to the south of New Haven, from whence the original settlers hailed.