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The current town of Mississippi Mills was incorporated on January 1, 1998 by amalgamating the town of Almonte with the township of Ramsay and the town of Pakenham.
Almonte's first settler was David Shepherd, who in 1819 was given 200 acres (0.81 km2) by the Crown to build and operate a mill. The site became known as Shepherd's Falls. That name was never official, however, as Shepherd sold his patent after his mill burned down. The buyer of the patent, Daniel Shipman, rebuilt the mill and the settlement became known as Shipman's Mills in 1820.
The majority of Shipman's Mills' early settlers were Scottish. The town grew to encompass thirty stores and forty other businesses. A textile mill town almost from the start, at its peak it boasted seven busy woolen mills. During this time of rapid expansion the town changed its name from Shipman's Mills to Ramsayville and then to Waterford. When in 1855 the newly-created Canadian post office pointed out there was already a Waterford in Ontario, the town needed yet another name change.
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