The town of Houlton was settled by, and named for, Joseph Houlton, who immigrated to the area from Massachusetts in 1807. A family by the name of Putnam settled in the area that same year. In 1810, the prorietors of the land employed Joseph Houlton to survey the land into 160 acre lots, reserving two for public purposes.
In 1828, the United States government established a miltary post, called the Hancock Barracks, in Houlton. In 1839, when the Aroostook War flared up, Houlton was manned by three companies of the 1st Artillery Regiment under Major Kirby, who helped to restrain the twelve companies of state milita from starting a shooting war with Canada.
The town was officially incorporated on March 8, 1831 from Houlton Plantation. In 1834, it annexed land from the Williams College Grant.
Houlton is the county seat for Aroostook County and, as such, its nickname is the "Shire Town." The Meduxnekeag River flows through the center of town, and the border with the Canadian province of New Brunswick is three miles east of the town's center.