Middletown was platted as a town Nov. 1, 1802, by Stephen Vail. The site for the settlement had been selected by Daniel Doty in the 1790s. Some accounts say the name was selected because the town was midway between Dayton and Cincinnati. "It still remains a question as to why the town was given the name," said George Crout in Middletown U. S. A. Crout said "one historian felt the town received its name from Stephen Vail's hometown, Middletown, New Jersey. It appears that only Stephen Vail could have answered that question," added Crout, "and he never did." A post office was authorized April 1, 1807.
Middletown experienced rapid growth after the ceremonial Miami-Erie Canal groundbreaking in July 1825 (at the present intersection of Verity Parkway and Yankee Road). George Crout said "among the earlier settlers . . . Abner Enoch, Hugh Vail, John Sutphin, John Martin and Peter Vanderveer worked to have the canal built through Middletown." After the canal opened in 1827, the town's population jumped to 530 people in 1830. Three years later, the village of Middletown was incorporated. The Middletown Hydraulic (see separate entry) provided power for industry. The Short Line, the city's first railroad, entered Middletown in July 1872. Middletown also was served by a traction (or interurban) line between Dayton and Cincinnati from 1897 until 1939. (Also see Port Middletown and Polar Bear.)