The town was first settled around 1775, but few more arrived until after the American Revolution. Tension between ethnic Germans and New Englanders slowed early development. The Town of Otego was formed in 1822 from the Towns of Unadilla and Franklin as the "Town of Huntsville." In 1830, the name was changed to Otego, when part of the Town of Milford was added. The Otsdawa Creek Site was listed on the National Register of Historic Places in 1980.
As of the census of 2000, there were 3,183 people, 1,234 households, and 874 families residing in the town. The population density was 70.9 people per square mile. There were 1,383 housing units at an average density of 30.8 per square mile. The racial makeup of the town was 97.55% White, 1.01% Black or African American, 0.22% Native American, 0.44% Asian, 0.16% from other races, and 0.63% from two or more races. Hispanic or Latino of any race were 1.19% of the population. There were 1,234 households out of which 33.8% had children under the age of 18 living with them, 56.2% were married couples living together, 9.6% had a female householder with no husband present, and 29.1% were non-families. 22.0% of all households were made up of individuals and 10.3% had someone living alone who was 65 years of age or older. The average household size was 2.54 and the average family size was 2.93. In the town, the population was spread out with 27.0% under the age of 18, 5.9% from 18 to 24, 27.0% from 25 to 44, 25.8% from 45 to 64, and 14.2% who were 65 years of age or older. The median age was 39 years. For every 100 females, there were 93.0 males. For every 100 females age 18 and over, there were 89.5 males. The median income for a household in the town was $31,563, and the median income for a family was $36,543. Males had a median income of $27,986 versus $25,868 for females. The per capita income for the town was $15,479. About 8.7% of families and 11.4% of the population were below the poverty line, including 13.8% of those under age 18 and 6.6% of those age 65 or over.
Cooks Corners - A hamlet in the northwest part of the town located on County Highway 6.
Hell Hollow - Also known as "The Perry District", named by a former schoolteacher in response to the antics of his students.
Lake Misery - small lake in the northwest part of town.
Mill Creek - small community west of Hell Hollow and north of the Village of Otego on creek of same name that once powered many small mills.
Mount Zion - An elevation southwest of Otego. Partly in Delaware County
Otego - The Village of Otego on NY-7.
Otsdawa - A hamlet in the northeast part of the town, located on County Highway 8 and the West Branch Otsdawa Creek. The Otsdawa Baptist Church was listed on the National Register of Historic Places in 2002.
