The area around Clarendon was originally populated by various Native American groups. By 1799, French hunters and trappers had built cabins at the mouth of the Cache River. It was the point where The Military Road from Memphis, Tennessee to Little Rock crossed the White River. The Military Road was begun in 1826 and completed in 1828. By that date, a ferry crossing and post office had been established in Clarendon, and the town served as the terminus for a stagecoach line to the west. The Military Road was used as the route for some groups of Native Americans being relocated from eastern states to Oklahoma during the forced relocations commonly known as the Trail of Tears; Chickasaw, Choctaw, Creek, and Cherokee groups are known to have traveled along it. A railroad bridge across the White River was constructed in 1883 by the Texas and St. Louis Railway; the ferry operated until 1931 when it was replaced by a highway bridge.
The city of Clarendon was officially incorporated in 1859. In 1864, the city was burned to the ground by Union forces in retaliation for the sinking of the tinclad Union gunboat USS Queen City by forces under the command of Confederate Brigadier General Joseph O. Shelby. The town's charter was dissolved in 1884, and it was reincorporated in 1898.
In the early 1900s, Clarendon developed a number of industries, including lumber, staves and barrels, oars, and buttons made from the shells of the area's plentiful freshwater mussels. The mussels also provided freshwater pearls, which were bought and sold at the Clarendon Pearl Market. The Moss Brothers Bat Company supplied baseball bats to a number of major league baseball players during this era.
Like most of eastern Arkansas, Clarendon was devastated by the Great Mississippi Flood of 1927. The main levee at Clarendon held until the White River reached a height of 38.5 feet, 8.5 above normal flood stage; the flood eventually crested at 44 feet. While no fatalities were reported, the town was inundated by water up to the second floor of many buildings, and the catastrophic inrush of water when the levee broke caused considerable damage to many buildings. The cleanup of mud and debris took many years.
The area around Clarendon today is primarily agricultural; tourism related to the area's hunting and fishing resources is the most common non-agricultural economic activity. The reported rediscovery of the ivory-billed woodpecker in 2004-2005 in the Cache River and White River National Wildlife Refuges has brought new attention to the area. There are several duck call makers in town. One Jim Stinson III, maker of Stinson Duck calls.