Stockholm was first settled on April 1, 1881, when Alfred and Brita Swenson and Anna and Johannes Anderson immigrated to the region from Sweden as part of the state's Swedish Colony Program. The town was organized as a plantation on March 4, 1895 from T16 R3 WELS, and incorporated as a town on February 27, 1911.
Named for the Swedish capital, the town is located along the Little Madawaska River, just off of Maine Route 161 and north of New Sweden, its sister colony. Removed from the main highways, the town is not on the way to anywhere.