Evidence of American Indian settlement in the area dates back 12,000 years. Following a series of failed uprisings with British support, however, the last Shawnee were forced to vacate the area before the end of the 18th century.

The first European descendant to settle in Owensboro was frontiersman William Smeathers or Smothers in 1797, for whom the riverfront park is named. The settlement was originally known as "Yellow Banks" from the color of the land beside the Ohio River. In 1817, Yellow Banks was formally established under the name Owensborough, named after Col. Abraham Owen. In 1893, the spelling of the name was shortened to its current Owensboro.

Several distillers, mainly of bourbon whiskey, have been in and around the city of Owensboro. The major distillery still in operation is the Glenmore Distillery Company, now owned by the Sazerac Company.

On August 14, 1936, downtown Owensboro was the site of the last public hanging in the United States. A 26 year old African American man, Rainey Bethea, was convicted and sentenced for the rape and murder of 70-year-old Lischa Edwards in a very short time (only 37 days lapsed between the crime and the execution). A carnival atmosphere was in place with vendors selling hotdogs, attended by a large crowd including children and many reporters. The execution was presided over by a female sheriff, Florence Shoemaker Thompson, who gained national media attention for her role in the process, although she declined to spring the trap.^{[clarification needed]} Before Bethea was dead, the crowd had already begun to tear at his clothes and even his body for souvenirs. The Kentucky General Assembly quickly abolished public executions after the embarrassment this caused.

The end of the Second World War brought civil engineering projects which helped turn Owensboro from a sleepy industrial town into a modern, expanding community by the turn of the 1960s. Many of the projects were set in motion by Johnson, Depp & Quisenberry, a firm of consulting engineers then engaged in a runway redesign at the County Airport; the "Depp" in question was a member of an old and prominent Kentucky family which includes the town's most famous son, actor Johnny Depp.

As of 1903, Owensboro was home to several stemmeries. Pinkerton Tobacco produced Red Man chewing tobacco in Owensboro. Swedish Match continues to make Red Man in a plant outside city limits.

The Owensboro Wagon Company, established in 1884, was one of the largest and most influential wagon companies in the nation. With eight styles or sizes of wagons, the company set the standard of quality at the turn of the 20th century.

Frederick A. Ames came to Owensboro from Washington, Pennsylvania, in 1887. He started the Carriage Woodstock Company to repair horse-drawn carriages. In 1910, he began to manufacture a line of automobiles under the Ames brand name. Ames hired industrialist Vincent Bendix in 1912, and the company became the Ames Motor Car Company. Despite its product being called the "best $1500" car by a Texas car dealer, the company ceased production of its own model in 1915. The company then began manufacturing replacement bodies for the more widely sold Ford Model T. In 1922, the company remade itself and started to manufacture furniture under the name Ames Corporation. The company finally sold out to Whitehall Furniture in 1970.

The start of the Kentucky Electrical Lamp Company, a light bulb manufacturing company was in 1899; it eventually was acquired by Kentucky Radio Company (Ken-Rad) in 1918 and later acquired by General Electric in 1945 and in 1987 acquired by MPD, Inc., created the light bulbs that illuminated the first night game in the history of Major League Baseball on May 24, 1935, between the Reds and Phillies at Cincinnati's Crosley Field. The Owensboro plant was a major part of General Electric's vacuum tube manufacturing operations, producing both receiving types and military/industrial ceramic types. In 1961, engineers at the General Electric plant in Owensboro introduced a family of vacuum tubes called the Compactron.

In June 1932, John G. Barnard founded the Modern Welding Company in a small building located near the Ohio River at First and Frederica Streets where the Commonwealth of Kentucky office building sits today. Today, Modern Welding Company has nine steel tank and vessel fabrication subsidiaries located throughout the United States, and five welding supply stores located in Kentucky and Indiana. The company is the country's largest supplier of underground and aboveground steel storage tanks for flammable and combustible liquids. The company celebrated its 75th anniversary in 2007.

Texas Gas Transmission Corporation was created in 1948 with the merger of Memphis Natural Gas Company and Kentucky Natural Gas Corporation and made its headquarters in Owensboro. Since that time, Texas Gas changed ownership four times. The company was bought by CSX Corp. in 1983, by Transco Energy Corp. in 1989, by Williams in 1995, and by Loews Corporation in 2003.

As of the census of 2010, there were 58,083 people and 23,380 households within the city. The population density was 2,999.1 people per square mile (1,198.4 per km²). There were 26,072 housing units at an average density of 1,394.7 per square mile (538.6/km²). The racial makeup of the city was 87.5% White, 7.3% African American, 0.9% Asian, 0.1% Native American, 0.01% Pacific Islander, 0.55% from other races, and 2.5% from two or more races. Hispanic or Latino of any race were 3.2% of the population.

There were 23,380 households, out of which 23.7% had children under the age of 18 living with them, 44.7% were married couples living together, 13.9% had a female householder with no husband present, and 37.8% were non-families. 33.3% of all households were made up of individuals, and 14.0% had someone living alone who was 65 years of age or older. The average household size was 2.29 and the average family size was 2.91.

In the city, the population was spread out, with 23.7% under the age of 18, 9.8% from 18 to 24, 27.4% from 25 to 44, 22.4% from 45 to 64, and 16.3% who were 65 years of age or older. The median age was 37 years. For every 100 females, there were 87.6 males. For every 100 females age 18 and over, there were 82.6 males.

The median income for a household in the city was $37,289, and the median income for a family was $41,333. Males had a median income of $33,429 versus $21,457 for females. The per capita income for the city was $21,183. About 12.2% of families and 18.4% of the population were below the poverty line, including 20.9% of those under age 18 and 12.4% of those age 65 or over.

According to the 2007 census, the Owensboro Metropolitan Area includes Daviess, Hancock, and McLean counties.