By 1855 the first permanent settlers on the site of Teeswater, the families of Matthew Hadwen and Peter Brown, had located here on the Tesswater River, In that year Brown erected a saw-mill and later added a grist-mill. In 1856 a post office was established with Hadwen as first postmaster. Although the settlement's early growth was slow, a tannery, a foundry, two taverns and a pearl-ash factory were in operation by 1867 when the population numbered some 400. The development of the community was spurred by the completion of a branch line of the Toronto, Grey and Bruce Railway in 1874 from a point near Orangeville. Teeswater was incorporated as a Village on January 1, 1875, with a population of about 700.