Pawtuxet means "Little Falls" in the Narragansett language, and this area was originally occupied by the Sononoce Pawtuxet tribe, part of the larger Narragansett Indian tribe. In 1638, Rhode Island founder Roger Williams purchased the property extending south from Providence to the Pawtuxet River. Shortly after, his followers William Arnold, William Harris, William Carpenter, and Zachariah Rhodes settled along the fertile meadows of the Pawtuxet. Meanwhile, Samuel Gorton purchased the land south of the Pawtuxet River and became the founder of Warwick. Early 18th century inhabitants took advantage of the power of the Pawtuxet River by constructing various mills, and took advantage of its excellent harbor by building one of America's premier shipping ports. The Pawtuxet Village Historic District boasts dozens of preserved Colonial structures among its scenic blend of homes and buildings. The mouth of the Pawtuxet River was a strategic location to settle, and gave boats a safe harbor and the village considerable importance in the triangular trade of the day, and shipyards for the coastal and West Indies trade were located here. It was here in 1772 where Rhode Island patriots took the first organized military action towards independence by attacking and burning the hated British revenue schooner. This was America's "First Blow for Freedom", known as the Gaspee Affair, and led directly to the establishment of permanent Committees of Correspondence, unifying the individual colonies, and starting the process of the American Revolution. The cities of Cranston and Warwick celebrate this historic role of Pawtuxet Village by hosting the annual Gaspee Days Parade each June. During the early 19th century, Christopher and William Rhodes formed the textile manufacturing firm which controlled the prosperity and swayed the destiny of Pawtuxet for more than half a century. It changed from a shipping port to a mill village with textile mills at either end of the Pawtuxet Falls. Pawtuxet shops and businesses of the 19th century may be seen on old advertising maps from about 1862-1870.
In the late 19th century, the Rhodes family developed one of Rhode Island's top attractions called the Rhodes-on-the-Pawtuxet casino, dance hall, and canoe center. Trolley lines from Providence carried vast numbers to the Pawtuxet area for entertainment.