The land was purchased from native Mahicans by Dutch settlers in 1662 and was originally part of Town of Claverack; formerly it was known as "Claverack Landing". Settled by New England whalers and merchants hailing primarily from Nantucket, Martha's Vineyard, and Providence, Rhode Island, Hudson was chartered as a city in 1785. The self-described "Proprietors" laid out a city grid, and Hudson grew rapidly as an active port, coming within one vote of being named the capital of New York State.
The city grew rapidly and by 1790 was the 24th largest city in the United States. As late as 1820, it was the fourth largest city in New York State. Martin Van Buren opened his first law office in Hudson. Margaret B. Schram's "Hudson's Merchants and Whalers: 1783-1850" tells the story of the city's maritime history. On March 1, 1794, General William Jenkins Worth, the future liberator of Texas in the Mexican-American War, was born on Union Street in Hudson. The house where he was born still stands. Worth Avenue in the city is named after him, as is Fort Worth, Texas. Sanford Robinson Gifford, a member of the second generation of Hudson River School of landscape painters, was born in Hudson on July 10, 1823, and following his death on August 29, 1880, was buried in Hudson's Cedar Park Cemetery. Hudson obtained a new charter in 1895. In 1935, to celebrate the sesquicentennial of the city, the United States Mint issued the Hudson Half Dollar. The coin is one of the rarest ever minted by the United States Government with only 10,008 coins struck. On the front of the coin is Henry Hudson's ship the Half Moon and on the reverse is the seal of the city. Local legend has it that coin was minted on the direct order of President Franklin Delano Roosevelt to thank the Hudson City Democratic Committee for being the first to endorse him for State Senator and Governor.
In the late 19th and first half of the 20th century, Hudson became notorious as a center of vice, especially gambling and prostitution, as described in Bruce Edward Hall's book, Diamond Street: The Story of the Little Town with the Big Red Light District. (The former Diamond Street is today Columbia Street.) At the peak of the vice industry, Hudson also boasted of more than 50 bars. These rackets were mostly broken up in 1951 after surprise raids of Hudson whorehouses by New York State Troopers under orders from then-Governor Thomas E. Dewey netted, among other catches, several local policemen.
After a steep decline in the 60s and 70s, the city has undergone a significant revival. A group of antiques dealers opened shops on the city's main thoroughfare, Warren Street, in the mid-1980s, the earliest being the Hudson Antiques Center, founded by Alain Pioton, and The English Antiques Center. Their numbers grew from a handful in the 1980s to almost seventy shops now, represented by the Hudson Antiques Dealers Association (HADA). Following this business revival, the city experienced a residential revival as well, and is now known for its active arts scene, antiques shops, restaurants, art galleries and nightlife.
In the last few years, perhaps encouraged by the number of gay business owners among the original antiques dealers, Hudson has become a destination for gay people who have opened new businesses, moved here from larger urban areas, and who have been in the forefront of the restoration of many of the city's historic houses. In 2010, Hudson hosted its first gay pride parade, which was attended by several hundred people.
With hundreds of properties listed or eligible to be listed in the State and National Registers of historic places, Hudson has been called "a finest dictionary of American architecture in New York State." The vast majority of properties in the Register-listed Hudson Historic District are considered contributing. A discussion of Hudson's architecture, its history, and recent revival, together with a collection of 200 period photographs of the city spanning the mid-19th to the early 20th century, is Historic Hudson: An Architectural Portrait by historian Byrne Fone.
In the 1990s and early 21st century, Hudson has had five mayors: William Allen, Dolly Allen, Richard Scalera, Kenneth Cranna and Richard Tracy. During that time Scalera has been elected Mayor seven times, but declined to run twice. This period has been marked by unusual levels of friction between elected officials and residents as the demographics and economics of the city have shifted.
This was followed from late 1998 until spring 2005 by a land use conflict between St. Lawrence Cement (SLC), a subsidiary of what was then one of the world's largest cement companies, the Swiss multinational giant Holderbank (since renamed Holcim), and private citizens. The company proposed a massive, coal-fired cement manufacturing project sprawling over in the city of Hudson and the town of Greenport, Columbia County, New York. Sustained grassroots opposition to the project was spearheaded by business owner Peter Jung and journalist Sam Pratt, co-founders of Friends of Hudson (FOH). The controversy garnered national attention from news outlets such as CNN and The New York Times, as well as media outlets in Canada and Switzerland. The project was withdrawn after Secretary of State Randy Daniels determined that the company's plans were inconsistent with the State's 24 Coastal policies, an outcome which opponents described as "a colossal relief" and supporters denounced as "flawed in its logic". Nearly 14,000 public comments were received by the State's Division of Coastal Resources (87% of them opposed to the project), a record for that agency.