The boundaries of Gloucester originally included the town of Rockport, in an area dubbed “Sandy Bay”. That village separated formally on February 27, 1840. In 1873, Gloucester was reincorporated as a city.

Gloucester was founded at Cape Ann by an expedition called the “Dorchester Company” of men from Dorchester (in the county of Dorset, England) chartered by James I in 1623. It was one of the first English settlements in what would become the Massachusetts Bay Colony, and predates both Salem in 1626 and Boston in 1630. The first company of pioneers made landing at Half Moon Beach and settled nearby, setting up fishing stages in a field in what is now Stage Fort Park. This settlement’s existence is proclaimed today by a memorial tablet, affixed to a 50-foot (15 m) boulder in that park.

At the Cape Ann settlement a legal form of government was established, and from that Massachusetts Bay Colony sprung. Roger Conant was the governor under the Cape Ann patent, and as such, has been called the first governor of Massachusetts.

Life in this first settlement was harsh and it was short-lived. Around 1626 the place was abandoned, and the people removed themselves to Naumkeag (what is now called Salem, Massachusetts), where more fertile soil for planting was to be found. The meetinghouse and governor’s house were even disassembled and relocated to the new place of settlement. At some point in the following years – though no record exists – the area was slowly resettled. The town was formally incorporated in 1642. It is at this time that the name “Gloucester” first appears on tax rolls, although in various spellings. The town took its name from the city of Gloucester in South-West England, perhaps from where many of its new occupants originated but more likely because Gloucester, England, was a Parliamentarian stronghold, successfully defended with the aid of the Earl of Essex against the King in the Siege of Gloucester of 1643.

This new permanent settlement focused on the Town Green area, an inlet in the marshes at a bend in the Annisquam River. This area is now the site of Grant Circle, a large traffic rotary at which Massachusetts Route 128 mingles with a major city street (Washington Street/Rt 127). Here the first permanent settlers built a meeting house and therefore focused the nexus of their settlement on the “Island” for nearly 100 years. Unlike other early coastal towns in New England, development in Gloucester was not focused around the harbor as it is today, rather it was inland that people settled first. This is evidenced by the placement of the Town Green nearly two miles from the harbor-front.

The Town Green is also where the settlers built the first school. By Massachusetts Bay Colony Law, any town boasting 100 families or more had to provide a public schoolhouse. This requirement was met in 1698, with Thomas Riggs standing as the town’s first schoolmaster.

The White-Ellery House was erected in 1710 upon the Town Green. It was built at the edge of a marsh for Gloucester’s first settled minister, the Reverend John White (1677–1760).

Early industry included subsistence farming and logging. Because of the poor soil and rocky hills, Cape Ann was not well suited for farming on a large scale. Small family farms and livestock provided the bulk of the sustenance to the population. Fishing, for which the town is known today, was limited to close-to-shore, with families subsisting on small catches as opposed to the great bounties yielded in later years. The fishermen of Gloucester did not command the Grand Banks until the mid-18th century. Historian Christine Heyrman, examining the town’s society between 1690 and 1750, finds that at the beginning community sensibility was weak in a town that was a loose agglomeration of individuals. Commerce and capitalism transformed the society, making it much more closely knit with extended families interlocking in business relationships.

Early Gloucestermen cleared great swaths of the forest of Cape Ann for farm and pasture land, using the timber to build structures as far away as Boston. The rocky moors of Gloucester remained clear for two centuries until the forest reclaimed the land in the 20th century. The inland part of the island became known as the “Commons”, the “Common Village”, or “Dogtown”. Here small dwellings lay scattered amongst the boulders and swamps, along roads that meandered through the hills. These dwellings were at times little more than shanties; only one was even two stories tall. Despite their size, several generations of families were raised in such houses. One feature of the construction of these houses was that under one side of the floor was dug a cellar hole (for the keeping of food), supported by a foundation of laid-stone (without mortar). These cellar holes are still visible today along the trails throughout the inland part of Gloucester; they, and some walls, are all that remain of the village there.

The town grew, and eventually colonists lived on the opposite side of the Annisquam River. This, in a time of legally mandated church attendance, was a long way to walk – or row – on a Sunday morning. In 1718 the settlers on the opposite shore of the river split off from the First Parish community at the Green and formed “Second Parish”. While still part of the town of Gloucester, the people of Second, or “West”, Parish now constructed their own meetinghouse and designated their own place of burial, both of which were in the hills near the marshes behind Wingaersheek Beach. The meetinghouse is gone now, but deep in the woods on the Second Parish Road, Old Thompson road, one can still find the stone foundation and memorial altar, as well as scattered stones of the abandoned burial ground.

Other parts of town later followed suit. Third Parish, in northern Gloucester, was founded in 1728. Fourth Parish split off from First Parish in 1742. Finally, in 1754, the people of Sandy Bay (what would later be called Rockport) split off from First Parish to found Fifth Parish. The Sandy Bay church founding was the last religious re-ordering of the colonial period. All of these congregations still exist in some form, with the exception of Fourth Parish, the site of whose meeting house is now a highway.

At one time, there was a thriving granite industry in Gloucester.

As of the 2000 census, there were 30,273 people, 12,592 households, and 7,895 families residing in the city. The population density was 1,166.0 people per square mile (450.2/km²). There were 13,958 housing units at an average density of 537.6 per square mile (207.6/km²). The racial makeup of the city was 91.99% White, 6.61% African American, 0.72% Asian, 0.12% Native American, 0.02% Pacific Islander, 0.50% from other races, and 1.03% from two or more races. Hispanic or Latino of any race were 15.48% of the population. 22.6% were of Italian, 16.2% Irish, 11.1% English, 8.5% Portuguese and 7.1% American ancestry according to Census 2000.

There were 12,592 households, out of which 27.6% had children under the age of 18 living with them, 48.8% were married couples living together, 10.6% had a female householder with no husband present, and 37.3% were non-families. 30.7% of all households were made up of individuals, and 11.4% had someone living alone who was 65 years of age or older. The average household size was 2.38 and the average family size was 3.00.

In the city, the population was spread out, with 22.0% under the age of 18, 6.5% from 18 to 24, 29.9% from 25 to 44, 26.1% from 45 to 64, and 15.6% who were 65 years of age or older. The median age was 40 years. For every 100 females, there were 92.0 males. For every 100 females age 18 and over, there were 88.8 males.

The median income for a household in the city was $58,568, and the median income for a family was $80,970 from a 2007 estimate. Males had a median income of $41,465 versus $30,566 for females. The per capita income for the city was $25,595. About 7.1% of families and 8.8% of the population were below the poverty line, including 11.8% of those under age 18 and 11.2% of those age 65 or over.