The first permanent settlers in the Daviess County were in present-day Reeve Township in 1801. New settlement continued until the War of 1812 and the town of Liverpool was founded. For three years, conflict with the British and Native Americans caused new settlements to stop, and existing settlers built a series of forts to protect them. After the war, Liverpool was given the more patriotic name of Washington. After Indiana gained statehood, Daviess County was formed in 1816. The boundaries were altered numerous times, eventually reaching their current state in 1828.
Construction of the Wabash and Erie Canal reached Daviess County in 1847 and Maysville and Plainville became important canal depots. Although the canal was short-lived, it affected settlement of the county through the influx of Irish laborers who stayed and as a means of transportation for the brief time it was open in the 1850s and 1860s.
It was the coming of the railroad, which provided the spark to create much of modern Daviess County as we know it. In 1857, the Ohio and Mississippi Railroad between Cincinnati and St. Louis was completed. Washington grew quickly, incorporating as a city in 1871. This growth was multiplied in 1888 with the construction of the great O&M repair yard, which served as the industrial backbone of the city for most of the next 100 years. Two additional rail lines were added through the county during the 1880s,
securing the future for the cities of Odon and Elnora. The first railroad builders were also met with the discovery of rich sources of coal. The towns of Montgomery and Cannelburg then became important stations for shipping coal along the O&M road.
The 20th Century saw the slow decay in importance of railroads (last passenger service was in 1971) and small farms nationwide with that impact reflected on the Daviess County population and economy. During World War II, the Crane NWSC naval base was opened in Martin County with considerable effect on the region. The western section of the county is famous for its sand and its melons and vegetable growing. The southern part of the county was impacted by the Glendale Fish and Game area, which was started in the 1950s. The Old Order Amish, a reclusive, traditionalist religious group whose members first arrived in Daviess County in 1868, saw their economic and cultural influence rapidly increase in the latter part of the century through farming, the construction industry, tourism and a rapidly-growing population.