Before the Europeans came, the Abenaki Indians called the area Sagadahoc, meaning "mouth of the big river," referring to the Kennebec River. Samuel de Champlain explored the Kennebec in 1605, and the Popham Colony was established just downstream from the current location of Bath, and erected Fort St. George, a settlement that failed perhaps due to a lack of leadership and harsh weather. During the few months that the colony was there, the first oceangoing vessel constructed by English shipbuilders in the New World was constructed, and named The Virginia of Sagadahoc. When the colony was abandoned, the ship provided passage back to England.
The next settlement was about 1660, and incorporated as part of Georgetown in 1753. Bath was split off and incorporated as a town on February 17, 1781, named by the postmaster, Dummer Sewell, after Bath in Somerset, England. In 1844, the western portion of the town was split off to create West Bath. On June 14, 1847, Bath was incorporated as a city, and designated the county seat in 1854. The City of Bath annexed land from West Bath in 1855.
Several industries were developed in Bath, including manufacturing of lumber, iron, and brass, but the city is known for shipbuilding, an industry that began in 1743 when Jonathan Philbrook constructed two seagoing vessels, and is currently the home of Bath Iron Works, Maine's largest employer. During World War II, Bath Iron Works completed a new ship every seventeen days.