Wachapreague, known as the "Little City by the Sea", has a long and fruitful history. The name of the town came from the Wachapreague, an Algonquian people who resided in the area centuries ago. This area was natural high ground that had easiest access to the ocean on the whole Eastern Shore. Emperor Wachiwampe left Wachapreague to his daughter in a will in 1656.
In 1744, the Teackles settled in the area and built a home at what is today 15 Brooklyn Avenue. In 1779, the British sloop Thistle came near the town but was forced away from Wachapreague Channel and sunk by fire from forts on Parramore and Cedar Islands. There was a tidal gristmill in the area located on Mill Creek to the south of town. It was not until 1874 that Wachapreague began as a small town. In that year, the Powell brothers sold the first lots to Isaac Phillips and Francis Smith. By 1883, 15 lots had been sold. The next year, the town applied for a post office and was denied the name Powellton since this name was already taken. The town chose the name Wachapreague in its place.
It was during the late 1800s that the town became a bustling port again. The Civil War had drastically reduced the commerce to the port, but now the port bustled with activity. By 1884, Wachapreague had twice weekly freight and passenger service with New York City. At this time numerous stores opened. The town also became a resort. One of the Powell brothers leased his house on Main Street to Alfred Kellam who turned it into a hotel that advertised itself for the excellence of fishing, hunting and sunbathing in the vicinity.
In 1902, the Hotel Wachapreague was built. It was a lavish, four-story building with 30 guest rooms. At the time it was built it did not seem a certain prospect. There was no regular ship service or even a paved road to the town, and the proprietor would not sell liquor. Still, the hotel's clientele grew and had several famous visitors, including President Herbert Hoover. The Hotel Wachapreague became a popular destination of visitors from the north.
During the early part of the 20th century, Wachapreague continued to grow as fields were subdivided and became town neighborhoods. Then in 1931, two years after the Stock Market Crash of 1929, the town's bank closed. The next year the town was owed over $2,000 in unpaid taxes and did not have enough money to cover its debts. Things went from bad to worse when the Chesapeake-Potomac Hurricane of 1933, known as the August storm, caused extensive damage in town where damages were estimated at $75,000. In 1935, the Methodist church burned.
In 1938, the town voted to cancel all back taxes and two weeks later received a check from the Alcoholic Beverage Control (ABC) for $522 allowing the town to pay its debts. In the 1940s, the town was still growing but several landmarks were destroyed by fire. In the 1960s, the town started to decline in population. In 1978, the Hotel Wachapreague burned. Today, the residential areas resemble the quiet town of 1940, and the waterfront bustles with fishermen's activity.