Greenwood Lake was originally called "Quampium" by the Munsee Indians who lived in a village situated almost exactly where the Village of Greenwood Lake is today.  The first Europeans settled the area as a farming community, centered in Dutch Hollow, in the 1700s.  The lake then took on the English name of Long Pond, and eventually, "Greenwood Lake".  Some of the farms at the head of the lake were purchased by the Morris Canal and Banking Company in 1837, and portions of them were inundated when a dam was built that same year in New Jersey, greatly increasing the size of the lake to its current dimensions.  The enlarged lake attracted tourists, and a grand hotel owned by Theron Felter was operating on the north shore by at least 1851.

The Montclair and Greenwood Lake Railroad arrived in 1875, which spurred an explosion of hotel development around Greenwood Lake.  The train station and steamboat docks which served the lake were located at the state line in Sterling Forest.  The Greenwood Lake Transportation Company operated the steamboats "Arlington" and "Milford", and the magnificent double-decked "Montclair", a beautiful side-wheeler built in 1876 and which reportedly carried from 200 to 400 passengers.