Situated near the eastern end of New York State's Heritage Corridor at what is known as the "Gateway to the West", the town of Rotterdam is closely linked with the early development of Schenectady. At that time the present town of Rotterdam served as the outlying farmlands and wood lots for the settlers. With few exceptions, these settlers made their homes in the stockade in Schenectady but went to their farmlands during the daytime.
The lands now known as Rotterdam became Schenectady's third ward when that city was incorporated in 1798. Rotterdam retained that status when the county of Schenectady was chartered in 1809. During this period, a council of aldermen and assistants from each of the four wards governed the city of Schenectady. In May 1819, the city council recommended that the third and fourth wards be separated out as towns, and on December 31, a petition to the state legislature was drafted. The legislation was passed on April 14, 1820, the final day of the legislative session, creating the town of Rotterdam.