Waterville was founded in 1885 and platted in 1886. The town was incorporated under the Territorial Charter in 1889 but after Washington gained statehood the town was officially incorporated on May 12, 1890.
Since its founding in 1889, Waterville, along with the designation of being the seat of Douglas County, boasts a rich history filled with farming, recreation destinations, and diverse economic trends.
In 1883, Stephen Boise placed a squatter's claim on the shrub steppe plateau in Eastern Washington, high above a big bend in the Columbia River. Soon, he built a cabin and dug a well. The well produced water, and lots of it…it was the only available water for miles around. Before long, the site was to become a county seat; the precious liquid would give the Town of Waterville its name.
A.T. Greene bought the Boise land claim in 1885, with visions of building a town. He deeded and platted 40 acres (160,000 m2) for use as the original townsite, which he called Waterville. Waterville boosters wanted the town to be the county seat of newly established Douglas County. The problem was, Douglas County already had a county seat, a small town named Okanogan (not the Okanogan in Okanogan County), six miles (10 km) to the northeast. Okanogan, however, was dry… despite several attempts, not a single well produced a drop of water. So at a political convention in Okanogan, the Waterville contingent produced a barrel of water and insisted on moving the county seat to its source. Bowing to popular demand, the Commissioners did so on May 2, 1887, declaring Waterville to be the new county seat. On March 22, 1889, Waterville became an incorporated town in Washington Territory. That same year, town founder A. T. Greene built the first Douglas County Courthouse in Waterville and sold it to the newly formed county for one dollar. No trace remains of Okanogan, but the town of Douglas survives as an unincorporated hamlet.
Washington became the 42nd state in the union shortly thereafter, so the Town of Waterville was re-incorporated under the laws of Washington State on May 3, 1890. By 1892, the town boasted several hundred residents, and a number of merchants to serve them and the surrounding rural population.
Early dreams of cattle farming on the plateau were dashed when the harsh winter of 1889−1890 killed most of the local stock. Thereafter, potatoes and wheat vied for supremacy as the dominant cash crop. Eventually, wheat farming won out and became the mainstay of the local economy. Blessed with fertile soil, plenty of winter snow and spring rain, dry summers, and high market demand, local wheat farmers prospered in the early years, and the Town of Waterville grew and prospered with them.
Fire wiped out many of the early wood frame commercial structures in Waterville. The commercial street was moved one block as new buildings sprang up, this time of fire resistive masonry construction. The buildings in this district became a lively and prosperous economic hub that served the entire region.
Today, the one-hundred-year-old Waterville commercial district is listed on the National Register of Historic places, as are the nearby Waterville Hotel and the Nifty Theatre, other buildings from the same era.
In 1905, a stately brick courthouse, still in use today and listed on the State Historic Register, replaced the original wood frame courthouse built in 1889.
According to the United States Census Bureau, the town has a total area of 0.87 square miles (2.25 km2), all of it land.
Waterville is located at 47°38′52″N 120°4′22″W (47.647889, −120.072779).
Waterville experiences a semi-arid climate (Köppen BSk) with cold, moist winters and hot, dry summers.
The Douglas County Sheriff's Office headquarters is in Waterville.