Willoughby's first permanent settler was David Abbott in 1798, who operated a gristmill. Abbott and his family had close relations to the local tribe of Erie Indians along the banks of the river the Indians called the "Sha-ga-rin" or Clear Water. This river was later called the Chagrin River, though the derivation of the name remains in dispute.
In 1835, the village was permanently named "Willoughby" in honor of Dr. Westel Willoughby, Jr., a public health official that the founders of the Medical College, which was based in the city, hoped to attract to the area. This medical college would later merge with Western Reserve Academy in Hudson, OH to eventually become Western Reserve University, the predecessor to Cleveland's Case Western Reserve University. Many historical buildings from this period survive to this date, affording the downtown Willoughby area some outstanding specimens of 19th century architecture.
In World War I, the U.S.Army chose Willoughby as the site for a chemical weapons plant producing lewisite.
Over time, Willoughby sent citizens into every major U.S. military conflict. Several memorials and historical relics are displayed in Wes Point Park, the center of downtown Willoughby, to honor those that have served.
Willoughby is the only town in America that has belonged, at one time or other, to six counties (Washington, Jefferson, Trumbull, Geauga, Cuyahoga, and Lake).