The town was formed in 1807 from part of the Town of Pawling. The first town meeting took place in the home of John Preston, an early settler. The home, built circa 1730, is now an inn and restaurant known as Old Drovers Inn.
The Harlem Valley Psychiatric Center (1924–1994) was a major source of employment for Dover and the surrounding areas. When the Center was closed in 1994, many businesses in the area were hit hard. Many of the brick & marble buildings on the grounds still stand. The property and buildings were purchased in the 2003 by the Benjamin Development Corporation and the eastern portion was sold to Olivet Management in 2013. They were removing asbestos from these buildings against regulations and since development has been shut down.