It is in the Minneapolis–Saint Paul metropolitan area, on the west bank of the St. Croix River, across from Houlton, Wisconsin.

[3][4] Stillwater is often called "the birthplace of Minnesota"[5] due to its role in the establishment of the state.

[7] Long before European Americans arrived the area was occupied by various indigenous peoples for thousands of years.

[10] In English, Hoġan Wanḳe Kin has been spelled variously as Hogan-wahnkay-kin, Hogan-wauke-kin and Hogan-wan-kee.

[12] The Ojibwe origin legend is very similar, also involving a man transformed into a giant fish and found floating in the lake.

The settlement was founded on October 26, 1843, when four partners formed the Stillwater Lumber Company.

[14] Settlers were drawn by the area's abundant lumber and river traffic resulting from the industry.

[5] In 1848, a territorial convention that began the process of establishing Minnesota as a state was held in Stillwater, at the corner of Myrtle and Main streets.

As more evidence of Stillwater's importance at the time, the territorial convention selected three leading Minnesota cities as locations for three important public institutions: Saint Paul was designated as the capital; the University of Minnesota was established at Minneapolis; and Stillwater became the site of the territory's first prison.

Lumbering was the predominant industry in the St. Croix River Valley in the second half of the 19th century.

Excursion steamboats, such as the Verne Swain and the Capitol, began to operate in the early 20th century, taking passengers to other cities along the river.

[16][17][18] On October 18, 1921, Charles Strite invented the automatic pop-up bread toaster in Stillwater.

By 1926, the Toastmaster Company began to market the first household toaster using a redesigned version of Strite's invention.

[20] In 1931, construction of the Stillwater lift bridge over the St. Croix River was completed at a final cost of $460,174, which was split equally between Minnesota and Wisconsin.

In 2020 it became part of a five-mile trail loop running through Stillwater and Houlton, Wisconsin.

In 2015 the Stillwater city council approved the annexing the last of the land covered by the agreement.

[23] Stillwater was described as the Minnesota headquarters of the Ku Klux Klan in 1991, and has been identified as a "probable" former sundown town.

The racial makeup of the city was 89.9% White alone (95.4% White alone or in combination), 1.7% Black or African American, 0.3% American Indian and Alaska Native, 1.5% Asian, 0.05% Pacific Islander, 0.9% from other races, and 5.6% from two or more races.