For over 8,000 years the site of Arcadia was part of the homeland of the Tongva people ("Gabrieliño" tribe), a Californian Native American tribe whose territory spanned the greater Los Angeles Basin, and the San Gabriel and San Fernando Valleys. Their fluid borders stretched between: the Santa Susana Mountains, San Bernardino Mountains, and San Gabriel Mountains in the north; the Santa Monica Mountains and Simi Hills in the west; the San Jacinto Mountains and Santa Ana Mountains in the east; and the coast and Catalina Island (Pimu) in the south. A Tongva settlement site within present-day Arcadia was known as Alyeupkigna (or Aluupkenga).

The town's site became part of the Spanish Mission San Gabriel Arcángel lands in 1771. After Indian Reductions to become Mission Indians, the Tongva were known as the Gabrieliños after the Mission's name. and under whose control these people worked during the mission period in California. Currently there are 1,700 people self-identifying as members of the Tongva or Gabrieliño tribe.

The Mexican land grant for Rancho Santa Anita was issued to Perfecto Hugo Reid and his Tongva wife, Victoria Bartolomea Comicrabit, in 1845. It was named after a family relation, Anita Cota, on his wife's side. Reid documented the Gabrieliño Native Americans in a series of letters written in 1852, and served as a delegate to the 1849 California Constitutional Convention. In 1847, Reid sold Rancho Santa Anita to his Rancho Azusa neighbor, Henry Dalton.

The rancho changed owners several times before being acquired by Gold Rush immigrant, businessman, and major regional land owner Elias Jackson "Lucky" Baldwin in 1875. Baldwin purchased 8,000 acres (32 km²) of Rancho Santa Anita for $200,000. Upon seeing the area, he gasped "By Gads! This is paradise!" Upon buying the land, Baldwin chose to make the area his home and immediately started erecting buildings and cultivating the land for farming, orchards, and ranches. Baldwin built the Queen Anne Cottage for his fourth wife and himself in 1885–1886, now preserved within the Arboretum. In 1885, the main line of the Los Angeles and San Gabriel Valley Railroad, in which Baldwin was a stockholder, was opened through the ranch, making subdivision of part of the land into a town site practical. Later, this rail line became a Santa Fe Railroad line. In 1889, on a site just north of the corner of First Avenue and St. Joseph Street, adjacent to the Santa Fe tracks, Baldwin opened the 35 room Hotel Oakwood to be the centerpiece of his new town. In 1890 the extant Rancho Santa Anita Depot was built.

By the turn of the 20th century, Arcadia had a population nearing 500 and an economy that was becoming based on entertainment, sporting, hospitality, and gambling opportunities, the latter including an early version of the Santa Anita race track. Baldwin oversaw the incorporation of Arcadia into a city in 1903, and was its first mayor.

In 1913 Anita Baldwin, Lucky's daughter, built a 50-room mansion on 19 acres (77,000 m²) of the Baldwin Ranch she inherited from him, and named it "Anoakia" (Anita and oak). The 17,000-square-foot residence was in the Italian Renaissance Revival style, with murals by Maynard Dixon. The estate had a significant Greek Revival style colonnaded "Parthenon" bathhouse/gymnasium beside a large pool, an apiary and aviaries, kennels and stables, tennis courts and pergolas, and preserved the native oak woodlands.

After her death in 1939 the estate became the Anoakia School for Girls, which became the coeducational Anoakia School in 1967, then moved to Duarte in 1990 as the Anita Oaks School. The school owner's efforts to develop the property into a village of homes with the old mansion as its centerpiece were rejected by the city. After an extended debate, with local citizens and regional preservationists efforts to preserve the historic main house, the city council voted to approve demolition for a real estate development by new owners in 1999. The "Anoakia" mansion, all other significant estate structures and outbuildings, garden features, and numerous California sycamore and Coast live oak trees were demolished for 31 luxury home sites in 2000. Some of the mansion's architectural elements were salvaged and removed. Only the gatehouse, on the estate's former southeast corner at Foothill and Baldwin, and the perimeter walls remain after the "Anoakia Estates" development was built.

During World War I, Arcadia was home to the U.S. Army's Ross Field Balloon School, at the present-day Santa Anita Park site. Army observers were trained here in techniques to observe enemy activity from hot air balloons.

After World War I, Arcadia's population grew and local businesses included many chicken ranches and other agricultural activities. During the 1920s and 1930s, Arcadia began its transition to the residential city that it is today, as small farms and chicken ranches gave way to homes and numerous civic improvements, including a city library and a city hall. Scenes of many of Arcadia's interesting older sites can be viewed in a series of historic watercolors painted by local artists Edna Lenz and Justine Wishek. The city was on historic U.S. Route 66 in California, present-day Colorado Boulevard, with businesses serving travelers on it.

Thoroughbred horse racing had flourished briefly under Lucky Baldwin, who founded a racetrack adjacent to the present site, until it was outlawed by the state of California in 1909. It returned to Arcadia when racing was legalized again, with the opening of Santa Anita Park in December 1934. Architect Gordon Kaufmann designed its various buildings in a combination of Colonial Revival and Streamline Moderne styles.

The Santa Anita Assembly Center site is California Historical Landmark #934. In 1942 during World War II, the racetrack grounds were used as a processing and holding site for Japanese Americans who had been removed from their homes and communities for forced relocation and internment under President Franklin Roosevelt's Executive Order 9066. The Civilian Assembly Center at the racetrack became the largest and longest operating one of the eighteen, holding citizens until the Relocation Center camps were completed in interior areas of California and other states. More than 18,000 persons resided at the racetrack in primitive conditions. Four hundred temporary tarpaper barracks were constructed on the racetrack grounds to house many of the detainees, where they lived three families per unit. 8,500 detainees lived in converted horse stalls. Bachelors were housed in the grandstand building. They had group showers, non-private bathrooms, and 24-hour armed surveillance. Each resident was given an "Army manufacture bed, one blanket and one straw tick." The Assembly Center held people from late March through the end of October 1942, when the internees were relocated inland to permanent internment camps at Manzanar and Tule Lake in California, and eight others in Western states and Arkansas.

At the time, Arcadia's civic leaders were very vocal in their support of the Japanese American relocation internment policies of the federal government.^{[citation needed]}

In November 1942 the center was turned over to the U.S. Army Ordnance Corps for training purposes and was officially renamed Camp Santa Anita. Later in the war it served as a prisoner of war—POW camp, holding several thousand of Rommel's German Afrika Korps soldiers.

Arcadia largely grew up as the well-to-do suburb of neighboring Pasadena, with many early residents being the sons and daughters of long established Southern California families. A large tract of estate homes was developed by Harry Chandler, the scion of the Los Angeles Times, who lived in adjacent Sierra Madre, California. The city became the residence of choice for many corporate chief executives, including those in aerospace, the horse racing industry, and finance.

The postwar boom saw Arcadia grow rapidly into a suburban residential community, with many of the chicken ranches being subdivided into home lots. Between 1940 and 1950, the population grew by more than two and a half times. The housing boom continued through the 1950s and 1960s and along with that growth came the necessary infrastructure of schools, commercial buildings, and expanded city services.

During the postwar boom, a modern commercial district developed along Baldwin Avenue south of Huntington Drive in west Arcadia. In 1951 this strip, called the West Arcadia Hub, was anchored by a new, locally owned Hinshaw's department store. This was the first large department store to be built in Arcadia, and the largest in the western San Gabriel Valley outside the city of Pasadena. This development marked the beginning of Arcadia's gradual transformation into one of the leading shopping districts of the San Gabriel Valley.

In 1947, 111 acres (0.45 km²) that comprised the heart of the Baldwin Ranch were deeded to the State of California and the County of Los Angeles, and developed into Los Angeles County Arboretum and Botanic Garden.

Until a Supreme Court ruling in 1965, every property sale contract within the borders of Arcadia had to include a provision that the new owner could only sell the property to a white Protestant. However, these clauses had been ruled unenforceable by the Supreme Court's ruling in 1948's Shelley v. Kraemer, and many non-Protestant families did, in fact, own homes and live in Arcadia well before 1965.^{[citation needed]}

In October 1975, the Santa Anita Fashion Park was opened to the public on the corner of Baldwin Avenue and Huntington Drive, on part of the former Santa Anita Assembly Center site. The center court featured a very large "Blue head" by artist Roy Lichtenstein, which was later removed. The mall expanded in 2004, and renamed Westfield Santa Anita. It was affected by the late 2000s Great Recession, but continues to attract business.

James Dobson, a previous Arcadia resident, founded the nonprofit Christian ministry Focus on the Family in the city in 1977. Its original office still stands on the south side of Foothill Boulevard. Focus grew to larger quarters in the city, and in intervening years expanded to Monrovia for warehouse space before moving out of Arcadia completely in 1990. Focus on the Family is now based in Colorado Springs, Colorado, but still has thousands of members in Arcadia.

In the late 1990s, Native American activists threatened to sue Arcadia High School over its use of the "Apache" mascot. The high school's use of Native American symbols, including an "Apache Joe" mascot, the Pow Wow school newspaper, the "Apache News" television program, the "Smoke Signals" news bulletin boards, the school's auxiliary team's marching "Apache Princesses" and opposing football team fans' "Scalp the Apaches" signs were viewed by these Native American activists and many Arcadia community members as offensive. Other residents, and some school alumni with Native American ancestry, did not object to their use.^{[citation needed]} The school consulted with some Native American groups and made some concessions, but did not change the mascot.^{[citation needed]} Arcadia High School has a yearly charity drive for the Apache community.^{[citation needed]}

In 2016, Arcadia was ranked the 5th most expensive housing market in the United States by Business Insider, with an average list of $1,748,680 for a four-bedroom home.

In 2012, Arcadia was ranked 7th in the nation on CNN Money magazine's list of towns with highest median home costs.

Arcadia's Upper Rancho neighborhood was ranked the 23rd richest neighborhood in Southern California by Business Insider in 2014, with a mean household income of $310,779.

The 2010 United States Census reported that Arcadia had a population of 56,364. The population density was 5,062.5 people per square mile (1,954.6/km²). The racial makeup of Arcadia was 33,353 (59.2%) Asian, 18,191 (32.3%) White, (25.7% Non-Hispanic European whites), 681 (1.2%) African American, 186 (0.3%) Native American, 16 (0.03%) Pacific Islander, 2,352 (4.2%) from other races, and 1,585 (2.8%) from two or more races. Hispanic or Latino of any race were 6,799 persons (12.1%).

The census reported that 55,502 people (98.5% of the population) lived in households, 639 (1.1%) lived in non-institutionalized group quarters, and 223 (0.4%) were institutionalized. There were 19,592 households, out of which 7,336 (37.4%) had children under the age of 18 living in them, 11,703 (59.7%) were opposite-sex married couples living together, 2,437 (12.4%) had a female householder with no husband present, 865 (4.4%) had a male householder with no wife present. There were 469 (2.4%) unmarried opposite-sex partnerships, and 92 (0.5%) same-sex married couples or partnerships. 3,855 households (19.7%) were made up of individuals, and 1,926 (9.8%) had someone living alone who was 65 years of age or older. The average household size was 2.83. There were 15,005 families (76.6% of all households); the average family size was 3.26.

The population was spread out, with 12,290 people (21.8%) under the age of 18, 4,102 people (7.3%) aged 18 to 24, 13,409 people (23.8%) aged 25 to 44, 17,349 people (30.8%) aged 45 to 64, and 9,214 people (16.3%) who were 65 years of age or older. The median age was 43.1 years. For every 100 females, there were 91.2 males. For every 100 females age 18 and over, there were 87.7 males according to the census.

There were 20,686 housing units at an average density of 1,858.0 per square mile (717.4/km²), of which 12,371 (63.1%) were owner-occupied, and 7,221 (36.9%) were occupied by renters. The homeowner vacancy rate was 1.1%; the rental vacancy rate was 6.7%. 37,000 people (65.6% of the population) lived in owner-occupied housing units and 18,502 people (32.8%) lived in rental housing units.

These were the ten neighborhoods in Los Angeles County with the largest percentage of Asian residents, according to the 2000 census: