New Sweden was colonized by Swedish immigrants after the American Civil War. Maine, like other states, was losing population to the westward migration, so a policy was enacted into law in 1870, encouraging Swedish immigration, which was largely responsible for the settlement of New Sweden and nearby Stockholm, Maine.
The town was incorporated on January 29, 1895 from New Sweden Plantation, which was itself organized in 1876 from T15 R3 WELS.
Both New Sweden and Stockholm have preserved their Swedish heritage through several historical societies and festivals recalling their Nordic roots.