Chicago has played a central role in American economic, cultural and political history. Since the 1870s Chicago has been the largest and most dominant metropolis in the Midwestern United States. The recorded history begins with the arrival of French explorers, missionaries and fur traders in the late 17th century and their interaction with the local Potawatomi Native Americans. Jean Baptiste Point du Sable, a black freeman, by 1790 was the first permanent non-indigenous settler in the area. The small settlement was defended by Fort Dearborn after its completion in 1804, but was abandoned as part of the War of 1812 in expectation of an attack by the Potawatomi, who caught up with the retreating soldiers and civilians not two miles south of the fort. The modern city was incorporated in 1837 by Northern businessmen and grew rapidly from real estate speculation and the realization that it had a commanding position in the emerging inland transportation network, based on lake traffic and railroads, controlling access from the Great Lakes and the eastern states into the Mississippi River basin.

Despite a fire in 1871 that destroyed the Central Business District, the city grew exponentially, becoming the nation's rail center and the dominant Midwestern center for manufacturing, commerce, finance, higher education, religion, broadcasting, sports, jazz, and high culture. The city was a magnet for European immigrants—at first Germans, Irish and Scandinavians, then from the 1890s to 1914, Jews, Czechs, Poles and Italians. They were all absorbed in the city's powerful ward-based political machines. Many joined militant labor unions, and Chicago became notorious for its violent strikes, but respected for its high wages.

Large numbers of African Americans migrated from the South starting in the World War I era as part of the Great Migration. Mexicans started arriving after 1910, and Puerto Ricans after 1945. The Cook County suburbs grew rapidly after 1945, but the Democratic party machine kept both the city and suburbs under control, especially under mayor Richard J. Daley, who was chairman of the Cook County Democratic Party. Deindustrialization after 1970 closed the stockyards and most of the steel mills and factories, but the city retained its role as a financial and transportation hub. Increasingly it emphasized its service roles in medicine, higher education, and tourism. The city formed the political base for leaders such as Stephen A. Douglas in the 1850s, Adlai Stevenson in the 1950s, and Barack Obama in recent years.

At its first appearance in records by explorers, the Chicago area was inhabited by a number of Algonquian peoples, including the Mascouten and Miami. The name "Chicago" is generally believed to derive from a French rendering of the Miami–Illinois language word šikaakwa, referring to the plant Allium tricoccum, as well as the animal skunk. The first known reference to the site of the current city of Chicago as "Checagou" was by Robert de LaSalle around 1679 in a memoir. Henri Joutel, in his journal of 1688, noted that the wild garlic, called "chicagoua", grew abundantly in the area. According to his diary of late September 1687:

when we arrived at the said place called Chicagou which, according to what we were able to learn of it, has taken this name because of the quantity of garlic which grows in the forests in this region.

The tribe was part of the Miami Confederacy, which included the Illini and Kickapoo. In 1671, Potawatomi guides first took the French trader Nicolas Perrot to the Miami villages near the site of present-day Chicago. Pierre François Xavier de Charlevoix would write in 1721 that the Miami had a settlement in what is now Chicago around 1670. Chicago's location at a short canoe portage (the Chicago Portage) connecting the Great Lakes with the Mississippi River system attracted the attention of many French explorers, notably Louis Jolliet and Jacques Marquette in 1673. The Jesuit Relations indicate that by this time, the Iroquois tribes of New York had driven the Algonquian tribes entirely out of Lower Michigan and as far as this portage, during the later Beaver Wars.

René-Robert Cavelier, Sieur de La Salle, who traversed the Kankakee and Illinois Rivers south of Chicago in the winter of 1681–82, identified the Des Plaines River as the western boundary of the Miami. In 1683, La Salle built Fort St. Louis on the Illinois River. Almost two thousand Miami, including Weas and Piankeshaws, left the Chicago area to gather at the Grand Village of the Illinois, seeking French protection from the Iroquois. In 1696, French Jesuits led by Jean-François Buisson de Saint-Cosme built the Mission of the Guardian Angel to Christianize the local Wea and Miami people. Shortly thereafter, Augustin le Gardeur de Courtemanche visited the settlement on behalf of the French government, seeking peace between the Miami and Iroquois. Miami chief Chichikatalo accompanied de Courtemanche to Montreal.

The Algonquian tribes began to retake the lost territory in the ensuing decades, and in 1701, the Iroquois formally abandoned their claim to their "hunting grounds" as far as the portage to England in the Nanfan Treaty, which was finally ratified in 1726. This was largely a political maneuver of little practicality, as the English then had no presence in the region whatsoever, the French and their Algonquian allies being the dominant force in the area. A writer in 1718 noted at the Was had a village in Chicago, but had recently fled due to concerns about approaching Ojibwes and Pottawatomis. The Iroquois and Meskwaki probably drove out all Miami from the Chicago area by the end of the 1720s. The Pottawatomi assumed control of the area, but probably did not have any major settlements in Chicago. French and allied use of the Chicago portage was mostly abandoned during the 1720s because of continual Native American raids during the Fox Wars.