The history of Cape Elizabeth is rooted in the era of early New England exploration. In 1614, the famous Captain John Smith mapped this cape and named it in honor of Princess Elizabeth, daughter of King James I of England. The first European settlement emerged here around 1628 on Richmond Island, where a trading post was established. Initially, the territory was part of the town of Falmouth (now Portland), but on November 1, 1765, the General Court of Massachusetts approved the creation of a separate district, which was a major step toward achieving independent town status.
The formation of the settlement was largely predetermined by its strategic location at the entrance to Casco Bay. The cape, jutting into the Atlantic, served as a vital landmark for ships, which eventually led to the construction of the famous Portland Head Light, initiated by George Washington in 1787. Coastal waters rich in fish and the availability of timber encouraged early settlement, while the distance from the center of Falmouth prompted local residents to seek self-governance to address local issues more effectively.
The economy of early Cape Elizabeth was based on a harmonious blend of maritime industry and agriculture. While Richmond Island flourished in the 17th century as a center for the fish and fur trade, residents on the mainland were actively engaged in farming. Thanks to fertile soils, the town eventually became known as a "market garden" for neighboring Portland, supplying it with fresh vegetables. This agrarian-maritime culture formed a unique way of life where farming traditions were closely intertwined with the rugged life of seafaring men.