On their return trip from the mouth of the Columbia River in 1806, the Lewis and Clark Expedition made note in their journals of a village on the site.

[8] Umatilla quickly became an important trade and distribution center not just for gold rush travelers but for the growing population of farmers and ranchers in the surrounding region.

A business district developed along Water Street at the river's edge and at the town's peak it had 3 hotels, 22 saloons, 6 mercantiles and 3 grocery stores, among others.

[11] Umatilla remained a vital commercial center until the late 1870s, when the removal of the rapids in 1877 allowed boats traveling from The Dalles to continue directly to Wallula and beyond.

[12] The following year the Oregon Steam Navigation Company began construction of a narrow gauge railroad that would connect Umatilla to the agricultural inland, passing from Pendleton to Weston.

[13] The great flood of 1894 destroyed what was left of the original business district and many surviving buildings were moved away from the river.

The Umatilla Masonic Lodge Hall, one of the only surviving buildings from the original townsite, was relocated to Echo, Oregon, 14 miles (23 km) to the southeast, in 1901.

By the early 1910s, Umatilla was making a resurgence as an agricultural center and a new business district was forming along 3rd and 4th streets, facing away from the river and towards the railroad tracks.

On October 25, 2011, the last barrel of HD mustard agent was destroyed and there is no longer a risk of chemical accident in Oregon and Washington.

The original townsite of Umatilla was abandoned completely when the United States Corps of Engineers determined that it would likely be inundated by the construction of the John Day Dam.

Between 1965 and 1968 the town was completely rebuilt south of the railroad tracks and all of the buildings on the original townsite were bought and demolished.

Umatilla's original street grid can still be seen north of the railroad tracks and is now a nature preserve and protected archaeological site.

[4] The city has seen some industrial investment in recent years through Amazon Web Service's data centers; however, wages have stagnated.

[21] As of 2001, the five largest employers in Umatilla were the Two Rivers Correctional Institution, JM Manufacturing (polyvinyl chloride pipes), Gilroy Food (dehydrated onions), Boise Cascade (wood chips), and Oregon Rustic (pine furniture).