Prior to European exploration and settlement in the 19th century, the Puget Sound region was inhabited by indigenous Coast Salish peoples. The modern-day site of downtown Stanwood was home to a Stillaguamish village named Sŭl-gwähs', led by chief Zis-aba, with an estimated 250 people and three large potlatch houses. George O. and G. L. Wilson were led on a canoe expedition up the Stillaguamish River by Samuel Hancock in 1851, becoming the first European Americans to explore the river.
Stanwood was first settled in 1866 by Robert Fulton and was initially named "Centerville". Stanwood's Post Office was established as Centerville in 1870, and the name was changed to Stanwood in 1877 by D.O. Pearson after his wife's maiden name. Stanwood was officially incorporated on October 19, 1903, and grew at the mouth of the Stillaguamish River one mile west of the 1891 Seattle-Montana Great Northern Railway tracks. East Stanwood (along the railroad tracks) was platted in 1906 and incorporated in 1922. The two towns consolidated in 1960.
According to the United States Census Bureau, the city of Stanwood has a total area of 2.84 square miles (7.36 km2), of which 2.82 square miles (7.30 km2) is land and 0.02 square miles (0.05 km2) is water. The city is at the northwestern corner of Snohomish County, and is considered part of the Seattle metropolitan area. It is approximately 50 miles (80 km) north of Seattle, and 13 miles (21 km) west of Arlington, the nearest neighboring city.
Stanwood is located at the mouth of the Stillaguamish River, where it flows into Port Susan, an arm of the Puget Sound, and Skagit Bay, the mouth of the Skagit River. To the west is Davis Slough, which separates Stanwood from Camano Island, and forms the border between Snohomish and Island counties.
Elevations in Stanwood range from 2 feet (0.61 m) above sea level near the Stillaguamish River to 190 feet (58 m) above sea level in the northeastern hills. The city is home to five creeks and drainage basins that flow into the Stillaguamish River and Puget Sound: Church Creek, Douglas Creek, Irvine Slough, the Skagit River, and the Stillaguamish River.
Stanwood's city limits are generally defined to the south by the Stillaguamish River; to the west by 104th Drive Northwest; to the north by 276th Street Northwest and 290th Street Northwest; and to the east by 68th Avenue Northwest. The urban growth area of Stanwood consists of an additional 425 acres (172 ha) outside city limits, including the unincorporated area of Northwest Stanwood.
The Stanwood area was formed during the Pleistocene glaciation and was further shaped through the rise and fall of sea level and sedimentary deposits from the Skagit and Stillaguamish rivers. Much of downtown Stanwood is located in a 100-year flood zone and is at risk of flooding from the Skagit River, as well as the Stillaguamish River.