Isaac A. Stevens, who is appointed the Washington Territory's first governor, has declared Olympia to be the territorial capital.

Stevens is also integral in the drafting and negotiation of treaties with native bands in the Washington Territory.

The site of Olympia has been home to Lushootseed-speaking peoples known as the Steh-Chass (or Stehchass; who became part of the post-treaty Squaxin Island Tribe) for thousands of years.

Other natives regularly visit the head of Budd Inlet and the Steh-Chass including the other ancestor tribes of the Squaxin, as well as the Nisqually, Puyallup, Chehalis, Suquamish, and Duwamish.

The first recorded Europeans came to Olympia in 1792.

Peter Puget and a crew from the British Vancouver Expedition are said to have explored the site, but neither recorded any encounters with the resident Indigenous population here.

In 1846, Edmund Sylvester and Levi Smith jointly claimed the land that now comprises downtown Olympia.

In 1851, the U.S. Congress established the Customs District of Puget Sound for Washington Territory and Olympia became the home of the customs house.

Its population has steadily expanded from Oregon Trail immigrants.

In 1850, the town settled on the name Olympia, at the suggestion of local resident Colonel Isaac N. Ebey, due to its view of the Olympic Mountains to the Northwest.

The area has begun to be served by a small fleet of steamboats known as the Puget Sound Mosquito Fleet.