Initially the area was known as "Rhodes Ferry Landing", named for Dr. Henry W. Rhodes, an early landowner who operated a ferry that crossed the Tennessee River in the 1810s at the present-day location of Rhodes Ferry Park. The city was incorporated as Decatur in 1821. It was named in honor of Stephen Decatur; after he was killed in a duel in 1820, President Monroe directed that the Alabama town be named for him.

In the early 1830s, Decatur was the eastern terminus of the Tuscumbia, Courtland and Decatur Railroad, the first railway built west of the Appalachian Mountains. In 1850 the Tuscumbia, Courtland and Decatur Railroad was incorporated into the Memphis & Charleston Railroad.

Because of its location on the Tennessee River at the strategically important crossing of two major railroads, Decatur was the site of several encounters during the American Civil War. When the Union army occupied the city early in the war, the commanding general ordered all but four buildings in the town destroyed. Bricks from some of the churches in town were used to build stoves and chimneys for the buildings that housed soldiers. The four buildings that remained (and are still standing) are the Old State Bank, the Dancy-Polk House, the Todd House, and the Burleson-Hinds-McEntire House. After the Union victory in the Battle of Atlanta, a Confederate army under the command of Gen. John Bell Hood briefly sparred with a vastly outmanned garrison during the 1864 Battle of Decatur, when Decatur was referred to as A Tough Nut To Crack.^{[citation needed]}

While the city was under Confederate control, plans for the Battle of Shiloh were mapped out within the Burleson-Hinds-McEntire House. These activities make the house one of the most historic buildings in Decatur.

New Decatur, Alabama was a city that rose out of the ashes of former Decatur west of the railroad tracks. New Decatur was founded in 1887 and incorporated in 1889. However, residents of the older Decatur resented the new town, founded and occupied by people who moved down from northern states. Animosity built until New Decatur renamed their town Albany, after Albany, N.Y., in September 1916. The impetus to meld the two towns came from the need for a bridge, instead of a ferry, across the Tennessee River. The Decatur Kiwanis Club was formed with an equal number of members from each town to organize efforts to get the state to build the bridge. In 1925, the two cities merged to form one City of Decatur. There is a noticeable difference between the two sides of town. The cities developed differently at different times, and still to this day have somewhat different cultures. Eastern portions of Decatur tend to act more suburban and traditional, while western portions tend to look more metropolitan and contemporary.^{[citation needed]}

The Old State Bank, on the edge of downtown, is the oldest bank building in the State of Alabama, being 173 years old. The first wave pool in the United States was built in Decatur and is still in operation at the Point Mallard Aquatic Center. The city has the largest Victorian era home district in the state of Alabama. Decatur is also home to Alabama's oldest opera house, the Cotaco Opera House, which still stands on Johnston Street.^{[citation needed]}

In the past, its industries included repair shops of the Louisville and Nashville Railroad, car works, engine works, bottling plants, and manufacturers of lumber, sashes and blinds, tannic acid, fertilizers, cigars, flour, cottonseed oil, and various other products.^{[citation needed]}

As of the census of 2000, there were 53,929 people, 21,824 households, and 14,753 families residing in the city. The population density was 1,009.7 people per square mile (389.9/km²). There were 23,950 housing units at an average density of 448.4 per square mile (173.1/km²). The racial makeup of the city was 75.50% White, 19.56% Black or African American, 0.58% Native American, 0.70% Asian, 0.13% Pacific Islander, 2.22% from other races, and 1.33% from two or more races. 5.64% of the population were Hispanic or Latino of any race.

There were 21,824 households, out of which 31.8% had children under the age of 18 living with them, 50.7% were married couples living together, 13.4% had a female householder with no husband present, and 32.4% were non-families. 28.9% of all households were made up of individuals, and 10.7% had someone living alone who was 65 years of age or older. The average household size was 2.43 and the average family size was 2.99.

In the city, the population was spread out, with 25.4% under the age of 18, 8.8% from 18 to 24, 29.6% from 25 to 44, 23.1% from 45 to 64, and 13.1% who were 65 years of age or older. The median age was 36 years. For every 100 females, there were 92.4 males. For every 100 females age 18 and over, there were 89.5 males.

The median income for a household in the city was $37,192, and the median income for a family was $47,574. Males had a median income of $37,108 versus $22,471 for females. The per capita income for the city was $20,431. About 11.9% of families and 14.9% of the population were below the poverty line, including 21.2% of those under age 18 and 11.1% of those age 65 or over.

As of the census of 2010, there were 55,683 people, 22,576 households, and 14,918 families residing in the city. The population density was 953.5 people per square mile (388.6/km²). There were 24,538 housing units at an average density of 420.2 per square mile (171.2/km²). The racial makeup of the city was 66.5% White, 21.7% Black or African American, 0.7% Native American, 0.9% Asian, 0.1% Pacific Islander, 7.9% from other races, and 2.2% from two or more races. 12.4% of the population were Hispanic or Latino of any race.^{[citation needed]}

There were 22,576 households, out of which 28.7% had children under the age of 18 living with them, 46.0% were married couples living together, 15.6% had a female householder with no husband present, and 33.9% were non-families. 29.9% of all households were made up of individuals, and 11.4% had someone living alone who was 65 years of age or older. The average household size was 2.42 and the average family size was 2.99.^{[citation needed]}

In the city, the population was spread out, with 24.1% under the age of 18, 9.0% from 18 to 24, 26.1% from 25 to 44, 26.3% from 45 to 64, and 14.5% who were 65 years of age or older. The median age was 37.9 years. For every 100 females, there were 92.7 males. For every 100 females age 18 and over, there were 96.2 males.^{[citation needed]}

The median income for a household in the city was $43,090, and the median income for a family was $55,158. Males had a median income of $42,146 versus $27,477 for females. The per capita income for the city was $23,615. About 12.8% of families and 17.5% of the population were below the poverty line, including 28.3% of those under age 18 and 11.1% of those age 65 or over.^{[citation needed]}