The community now known as Mundelein has been inhabited since at least 1650, when the Potawatomi people were known to have been trading with French fur traders. The first European inhabitants reached the area in the early 19th century. Peter Shaddle (for whom a street is named) was the first known settler, building a log cabin in the area now owned by St. Mary of the Lake Seminary in 1835.
The next settlers were tradesmen escaping from England's industrial depression, who became farmers in the Mundelein area. In honor of their former professions, they named the city "Mechanics Grove", and built schools, churches, and businesses. The community grew and (while still unincorporated) changed its name to "Holcomb", in honor of John Holcomb, a person who was active in the area's development. As Holcomb, the community added a railway station and a post office. The Holcomb area incorporated in February 1909 under a new name, "Rockefeller", a reference to businessman John D. Rockefeller.
The name Rockefeller was short lived, however. In July 1909, the community became "Area". This name change was requested by a local educational entrepreneur named Arthur Sheldon, who bought near town and built a school on it. The school taught sales techniques, including the philosophy of "AREA", which stood for "Ability, Reliability, Endurance, and Action." At one time, it boasted 10,000 students, many of them women (which was unusual for 1909). However, after several years the school closed.
In July 1918, Archbishop George Mundelein (later Cardinal) of Chicago purchased the property formerly owned by Sheldon's school. For about $10 million (1918 dollars), construction of St. Mary's of the Lake Seminary began in 1921. This seminary is still in operation, and is the largest in the United States, hosting up to 1,000 students.
On December 10, 1924, the Village Board held a special meeting with representatives from the Soo Line Railroad, who requested that the board change the village's name to Mundelein (for the cardinal). The board voted to make the change and asked the Illinois Secretary of State to make the name change. They received permission in April 1925, and the Village Board passed an ordinance changing the village's name to Mundelein. Cardinal Mundelein donated the village its first new fire truck, a 1925 Stoughton. The fire truck was officially turned over to the village at a ceremony held at the St. Mary of the Lake Seminary on July 17, 1925. The current Village Hall, with a few additions, is the same structure today that was built in 1929.