Settled in 1840, this area was described as the "mouth of the St. Croix". Prescott received its official name in 1851, apparently in honor of Philander Prescott, a fur trapper who built a cabin on the site where the City of Prescott now stands. He held claim to 1,200 acres for soldiers from Fort Snelling, MN, at the confluence of the Mississippi and the St. Croix Rivers.

There were plans to establish the first major community for immigrants migrating up the Mississippi River. Land speculation drove prices upward and the immigrants moved further north to what is now known as St. Paul, MN. The rivers played an important factor in the beginnings of Prescott. River traffic had to go by way of the Mississippi or St. Croix Rivers. This made Prescott a strategic place, becoming a center for river shipping, transportation and milling. Immigrants arrived via steamboats and settled in Minnesota and Wisconsin. The huge white pines to the north were harvested and rafted down the St. Croix by logging crews. In 1896, over 209 million board feet of lumber were rafted down river. Several warehouses stored food and supplies. Hotels accommodated the influx of people, resulting in the development of restaurants, banks and many new homes. The railroads lead to the demise of steamboat traffic. Lumbering resources were exhausted and settlers came in smaller numbers.