European settlement of the area dates from 1763, when King George III granted a charter for land in the Winooski River valley.

[7] Like many New England towns, Waterbury's economy was based around the local river mill industry and the surrounding agricultural producers.

Inscriptions on the sides of some buildings in Waterbury village purport to show where the level of the water rose during the 1927 flood.

The village recovered, and in 1938 the Waterbury Dam was built on the Little River by the Army Corps of Engineers to control future flooding in areas downstream of the town center.

Patients from the mental hospital were temporarily housed in various locations around Vermont, and over 1,100 of the 1,586 state employees were working in office space in other towns as of October 2011.

The state was expected to decide by 2012 whether to relocate all or part of the workforce back to Waterbury.

[3] Waterbury is the location of Ben & Jerry's Ice Cream, whose factory tours have become one of Vermont's most popular tourist attractions.

Businesses in the town, which sits between several major mountains including Mount Mansfield, typically thrive during the month of October, when tourism swells thanks to fall foliage.

Amtrak, the national passenger rail system, provides daily service to Waterbury, operating its Vermonter between St. Albans and Washington, D.C.

Radio station WDEV -550 AM & 96.1 FM (News/Talk), is located in town, with its offices and studios on Stowe Street.

WIXM –103.3 FM is officially licensed to Waterbury and has its transmission tower located on Ricker Mountain (which it shares with sister station WNCS Montpelier), but its offices and studios are located in South Burlington.

On March 26, 2020, the Vermont Community Newspaper Group announced that it was suspending publication of the Waterbury Record, after 13 years of publication, citing the lack of widespread advertising support and now the economic impact of the coronavirus pandemic.