In 1636, William Pynchon purchased land from the Agawam Indians on the east side of the Connecticut River. He moved from the Town of Roxbury to Springfield to found the first settlement in the area that comprises the territory of today's Chicopee Center (Cabotville). Both Cabotville and the Falls were developed as manufacturing centers (villages).

According to local historian Charles J. Seaver, the area above the falls was first settled in 1660. The land purchased from the Indians was divided into districts. Nayasett (Nipmuc for "at the small point/angle") was the name given to the area of what are now Chicopee Center and Chicopee Falls. The settlement in the upper district was at Skipmuck (possibly based on Nipmuc Skipmaug, meaning "chief fishing place" or Shipmuck, meaning "big watery place"), a place above the falls on the south side of the river.

Colonists built a sawmill as the first industrial site along the river. The mill was built at Skenungonuck (Nipmuc for "green fields") Falls (now Chicopee Falls) in 1678 by Japhet Chapin, John Hitchcock and Nathaniel Foote.

In 1786, what was called Factory Village began to develop when two acres of land was leased to 10 local men, with the understanding that they would build an iron foundry within two years. This was accomplished and the business flourished.

In 1823, Jonathan Dwight purchased the water privilege at Skenungonuck Falls in Chicopee. He built a textile mill and five years later, it operated 14,000 spindles and nearly 500 looms, making it the second-largest operation in the state. It processed cotton from the Deep South, becoming part of the extended slave economy and King Cotton. By 1831, settlers had developed two giant dams, two waterpower canals, and two manufacturing communities on the Chicopee River.

In 1848, Chicopee, which for more than two centuries had been a part of the Town of Springfield, was separated and organized as a distinct town. Political factions in Springfield wanted that jurisdiction to remain a town, rather than become a city and take on a mayoral form of government. By partitioning Chicopee, those political factions prevented Springfield from becoming a city until 1852. The result was that Springfield lost 2/5 of its land area and nearly half of its population when Chicopee was created.

Before and after the partition, eight Chicopee River companies gained product recognition around the globe: Ames, Belcher, Lamb, Dwight, Stevens, Spalding, Fisk, and Duryea. Below the falls, in the bend of the river at a place called Factory Village, an important chapter of the region's industrial history was played out.

Chicopee adopted the motto "Industriae Variae", which means "Various Industries". Chicopee's industries included cotton mills, woolen mills, textiles, brass and iron foundries, paper making, footwear factories, for leather boots and shoes, the first friction matches, and ship building. In nearby South Hadley Canal, the firearms company Crescent-Davis specialized in producing double-barrel shotguns.

The Ames Manufacturing Company made many machines and bronze cannons, and more swords than any other American manufacturer at the time. Ames cast a number of bronze statues, including Thomas Ball's monumental equestrian statue of President George Washington, installed in Boston's Public Garden. Ames was a major provider of cannon to the Union army during the Civil War. The Stevens Arms plant (later Savage) was responsible for most of the No. 4 Enfields manufactured for the British under Lend-Lease. Chicopee was home to production of the first gasoline-powered automobile made in the United States, the Duryea.

During the late nineteenth century, Chicopee Falls became a major manufacturing center of bicycles. The town was the site of at least two bicycle factories: The Overman Wheel Company (1882 to about 1899), and the Spalding sporting goods company.

Albert H. Overman moved his bicycle production from Hartford, Connecticut to Chicopee Falls in 1883. The Overman company benefited from the surging popularity of the safety bicycle during the bicycle boom of the 1890s. At its height in 1894, Overman's factory employed over 1,200 workers. The boom eventually went bust, as overproduction drove the price of bicycles down. By 1901 the Overman firm was out of business.

Chicopee was the first city west of Boston to form a publicly funded public library. The Chicopee Public Library was formed by a donation to the city by the Cabotville Institute.

As of the census of 2010, Chicopee was 3.1% black, 1.6% Asian, 18.5% Hispanic or Latino of any race, 75% white

As of the census of 2000, there were 54,653 people, 23,117 households, and 14,147 families residing in the city. The population density was 2,389.7 people per square mile (922.7/km²). There were 24,424 housing units at an average density of 1,067.9 per square mile (412.3/km²). The racial makeup of the city was 89.82% White, 2.28% African American, 0.20% Native American, 0.87% Asian, 0.10% Pacific Islander, 4.90% from other races, and 1.84% from two or more races. Hispanic or Latino of any race were 8.76% of the population (12.8% Puerto Rican, 0.5% Dominican, 0.4% Mexican, 0.2% Colombian). Chicopee is the second largest municipality in Western Massachusetts, after Springfield (defining Western Massachusetts as Hampden, Hampshire, Franklin, and Berkshire counties).

There were 23,117 households, out of which 26.5% had children under the age of 18 living with them, 42.6% were married couples living together, 14.2% had a female householder with no husband present, and 38.8% were non-families. 32.7% of all households were made up of individuals, and 14.1% had someone living alone who was 65 years of age or older. The average household size was 2.32 and the average family size was 2.96.

In the city, the population was spread out, with 22.6% under the age of 18, 8.5% from 18 to 24, 28.8% from 25 to 44, 22.5% from 45 to 64, and 17.6% who were 65 years of age or older. The median age was 39 years. For every 100 females, there were 90.7 males. For every 100 females age 18 and over, there were 87.1 males.

The median income for a household in the city was $35,672, and the median income for a family was $44,136. Males had a median income of $35,585 versus $25,975 for females. The per capita income for the city was $18,646. About 9.6% of families and 12.3% of the population were below the poverty line, including 19.5% of those under age 18 and 9.3% of those age 65 or over.