The first people known to have lived in the area now called Connecticut were American Indians, whose forebears may have come to New England as many as 10,000 years ago. By the early 17th century, Connecticut had between 6,000 and 7,000 Indians organized into 16 tribes, all members of the lose Algonquian Confederation. The most warlike of these tribes were the Pequot, who apparently had migrated not long before from the Hudson River region to escape the Mohawk and had settled along the Connecticut coast. There was also a heavy concentration of Indian groups in the Connecticut River Valley, but fear of Mohawk hunting parties kept them from occupying most of western and northwestern Connecticut.

Because of their fear of the Pequot along the shore and of the Mohawk to the west, most of Connecticut's Indians sought the friendship of English newcomers in the 1630s. The Indians sold land to the English and provided instruction in New World agricultural, hunting, and fishing techniques. The impact of English settlers on Connecticut's friendly Indians was devastating, however. The Indians lost their land, were made dependents in their own territory, and were decimated by such European imports as smallpox and measles. The Pequot, who sought to expel the English from Connecticut by a series of attacks in 1636–37, were defeated during the Pequot War by a Connecticut-Massachusetts force, aided by a renegade Pequot named Uncas. By the 1770s, Connecticut's Indian population was less than 1,500.

The first recorded European penetration of Connecticut was in 1614 by the Dutch mariner Adriaen Block, who sailed from Long Island Sound up the Connecticut River, probably as far as the Enfield Rapids. The Dutch established two forts on the Connecticut River, but they were completely dislodged by the English in 1654.

The early English settlers were part of a great migration of some 20,000 English Puritans who crossed the treacherous Atlantic to New England between 1630 and 1642. The Puritans declared that salvation could be achieved only by returning to the simplicity of the early Christian Church and the truth of God as revealed in the Bible. They sailed to America in order to establish a new society that could serve as a model for the rest of Christendom. Attracted by the lushness of the Connecticut River Valley, the Puritans established settlements at Windsor (1633), Wethersfield (1634), and Hartford (1636). In 1639, these three communities joined together to form the Connecticut Colony, choosing to be governed by the Fundamental Orders, a relatively democratic framework for which the Reverend Thomas Hooker was largely responsible. (According to some historians, the Fundamental Orders comprised the world's first written constitution, hence the state nickname, adopted in 1959.) A separate Puritan colony was planted at New Haven in 1638 under the leadership of John Davenport, a Puritan minister, and Theophilus Eaton, a successful merchant.

In 1662, the Colony of Connecticut secured legal recognition by England. Governor John Winthrop, Jr., persuaded King Charles II to grant a charter that recognized Connecticut's existing framework of government and established its north and south boundaries as Massachusetts and Long Island Sound and its east and west borders as Narragansett Bay and the Pacific Ocean. In 1665, New Haven reluctantly became part of the colony because of economic difficulties and feat of incorporation into Anglican New York.

Connecticut had acrimonious boundary disputes with Massachusetts, Rhode Island, New York, and Pennsylvania. The most serious disagreement was with New York, which claimed the entire area from Delaware Bay to the Connecticut River. The issue was resolved in 1683 when the boundary was set 20 mi (32 km) east of and parallel to the Hudson River, although it was not until 1881 that Connecticut, New York, and Congress established the exact line.

Connecticut functioned throughout the colonial period much like an independent republic. It was the only American colony that generally did not follow English practice in its legislative proceedings, nor did it adopt a substantial amount of English common and statute law for its legal code. Connecticut's autonomy was threatened in 1687 when Sir Edmund Andros, appointed by King James II as the governor of the Dominion of New England, arrived in Hartford to demand surrender of the 1662 charter. Connecticut leaders protected the colony's autonomy by hiding the charter in an oak tree, which subsequently became a landmark known as the Charter Oak.

With its Puritan roots and historic autonomy, Connecticut was a Patriot stronghold during the American Revolution. Tories numbered no more than 7% of the adult male population 2,000 to 2,500 out of a total of 38,000 males. Connecticut sent some 3,600 men to Massachusetts at the outbreak of fighting at Lexington and Concord in April 1775. Jonathan Trumbull, who served as governor from 1769 to 1784, was the only colonial governor in office in 1775 who supported the Patriots. He served throughout the Revolutionary War, during which Connecticut troops participated in most of the significant battles. Connecticut's privateers captured more than 500 British merchant vessels, and its small but potent fleet captured at least 40 enemy ships. Connecticut also produced arms and gunpowder for state and Continental forces, thus beginning an arms-making tradition that would lead to the state's unofficial designation as the "arsenal of the nation." It was also called the Provisions State, in large part because of the crucial supplies of foodstuffs it sent to General George Washington throughout the war. The state's most famous Revolutionary War figure was Nathan Hale, executed as a spy by the British in New York City in 1776.

On 9 January 1788, Connecticut became the 5th state to ratify the Constitution. Strongly Federalist during the 1790s, Connecticut ardently disagreed with the foreign policy of presidents Thomas Jefferson and James Madison, opposed the War of 1812, and even refused to allow its militia to leave the state. Connecticut's ire over the war was exacerbated by the failure of the government to offer significant help when the British attacked Essex and Stonington in the spring and summer of 1814. The politically vulnerable Federalists were defeated in 1817 by the Toleration Party. This coalition of Republicans and non-Congregationalists headed the drive for the new state constitution (1818) that disestablished the Congregational Church, a Federalist stronghold.

Long before the Civil War, Connecticut was stoutly antislavery. In the early years of independence, the general assembly enacted legislation providing that every black born after 1 March 1784 would be free at age 25. Connecticut had a number of antislavery and abolition societies whose members routed escaped slaves to Canada via the Underground Railroad. The state's pro-Union sentiment was reflected in the enormous support given to the Union war effort; some 55,000 Connecticut men served in the Civil War, suffering more than 20,000 casualties. Arms manufacturers such as Colt and Winchester produced desperately needed rifles and revolvers, and the state's textile, brass, and rubber firms turned out uniforms buttons, ponchos, blankets, and boots for Union troops.

The contributions by Connecticut industries to the war effort signaled the state's emergence as a manufacturing giant. Its industrial development was facilitated by abundant waterpower, the growth of capital held by banks and insurance companies, a sophisticated transportation network, and, most important, the technological and marketing expertise of the people. The first American hat factory was established in Danbury in 1780, and the nation's brass industry had its roots in Naugatuck Valley between 1806 and 1809. Connecticut clocks became known throughout the world. Micah Rugg organized the first nut and bolt factory in Marion in 1840; Elias Howe invented the first practical sewing machine in Hartford in 1843. Perhaps the most important figure in the development of Connecticut manufacturing was Eli Whitney, best known for inventing the cotton gin (1793).

Seventy-five years after Whitney's death, Connecticut was a leader in the production of hats, typewriters, electrical fixtures, machine tools, and hardware. The state's textile industry ranked 6th in the nation in 1900, with an annual output of $50 million. By 1904, Connecticut's firearms industry was producing four-fifths of the ammunition and more than one-fourth of the total value of all firearms manufactured by nongovernment factories in the US. These great strides in manufacturing transformed Connecticut from a rural, agrarian society in the early 1800s to an increasingly urban state.

The state's contribution to the Allied forces in World War I (1914–18) more than equaled its Civil War effort. Four Liberty Loan drives raised $437 million, more than the contribution from any other state. About 66,000 Connecticuters served in the armed forces, and the state's manufacturers produced 450,000 Enfield rifles, 45,000 Browning automatic rifles, 2 million bayonets, and much other war materiel. By 1917–18, four-fifths of Connecticut's industry was involved in defense production.

The prosperity sparked by World War I continued, for the most part, until 1929. During the 1920s, Connecticuters enjoyed a rising standard of living, as the state became a national leader in the production of specialty parts for the aviation, automotive, and electric power industries. However, from 1919 to 1929, Connecticut lost 14 of its 47 cotton mills to southern states.

The stock market crash of 1929 and the subsequent depression of the 1930s hit highly industrialized Connecticut hard. By the spring of 1932, the state's unemployed totaled 150,000, and cities such as Bridgeport fell deeply in debt. The economic reversal led to significant political change: the ousting of a business-oriented Republican administration, which had long dominated the state, by a revitalized Democratic Party under the leadership of Governor Wilbur L. Cross (1931–39). During his tenure, Connecticut reorganized its state government, improved facilities in state hospitals and penal institutions, and tightened state regulations of business.

Connecticut was pulled out of the unemployment doldrums in 1939 when the state's factories were once again stimulated by defense contracts. The value of World War II (1939–45) contracts placed in Connecticut was $8 billion by May 1945, and industrial employment increased from 350,000 in 1939 to 550,000 by late 1944. Connecticut's factories turned out submarines, Navy Corsair fighter aircraft, helicopters, 80% of all ball bearings manufactured in the US, and many thousands of small arms. Approximately 220,000 Connecticut men and women served in the US armed forces.

Since 1945, Connecticut has seen substantial population growth, economic diversification with a greater proportion of service industries, the expansion of middle-class suburbs, and an influx of black and Hispanic migrants to the major cities. Urban renewal projects in Hartford and New Haven have resulted in expanded office and recreational facilities, but not much desperately needed new housing. A major challenge facing Connecticut in the 1980s was once again how to effect the social and economic integration of this incoming wave of people and industries. Providing greater economic opportunities for people living in its cities remained a challenge for Connecticut into 2003.

Connecticut became the nation's wealthiest state during the 1980s, achieving the highest per capita income in 1986, a position still held in 1992 when its residents' per capita income of $26,797 was 35% above the average for the United States. The state's prosperity came in part from the expansion of the military budget, as 70% of Connecticut's manufacturing sector was defense related. The end of the cold war, however, brought cuts in military spending which reduced the value of defense related contracts in Connecticut from $6 billion in 1989 to $4.2 billion in 1990. By 1992, manufacturing jobs had declined by 25% while jobs in such service industries as retail, finance, insurance and real estate increased by 23%. The total number of jobs, however, dropped by 10% during the period. Tax relief measures were taken to make manufacturing more competitive in the state. In the mid-1990s, Connecticut's economy was on the upswing, fueled in part by the recovering banking industry, and its employment outlook improved.

In the 1980s and through the 1990s, Connecticut witnessed an increasing contrast between the standard of living enjoyed by urban and suburban residents, blacks and whites, and the wealthy and the poor. In 1992, the median family income in many of the state's suburbs was nearly twice that of families living in urban areas. Governor Lowel Weicker's administration imposed a personal income tax (designed to address the inequities of the sales tax system) and implemented a program to modify state funding formulas so that urban communities received a larger share. The state also launched an effort to improve the quality of public education in relatively poor cities, to bring it in alignment with suburban schools.

While per-capita income levels remained high in the state through the rest of the decade, poverty increased. According to government figures, in 1998 Connecticut still ranked first in the nation in per capita personal income ($37,700), but the state's poverty rate, just 6% (the lowest in the nation) in 1990, had climbed to 9.2% by 1998. While the state remained divided economically, it also was divided racially. Minority (black and Hispanic) populations were centered in urban Bridgeport, Hartford, and New Haven; smaller cities and suburbs remained predominately white.

Like many states across the nation, Connecticut faced a multi-million dollar budget deficit in 2003. Its legislature was considering a transportation package in 2003 that would increase a number of motor vehicle registration and licensing fees to raise an additional $20 million for 2004. Connecticut adopted a stringent welfare reform law under Governor John G. Rowland's tenure, limiting benefits to 21 months. A new death penalty law was passed for the state, as was a law requiring communities to be notified when sex offenders are released from prison. Connecticut in 2003 was looking to attract further business investment to the state.