The first settlement in the neighborhood of what would become Waterville was in 1850. In 1854, Nathaniel Beebe erected the Waterville Mill. In 1855, Col. J. Spooner opened a store, and in 1856, James Beebe built a hotel. The Waukon and Mississippi Railroad was completed through town in 1877, at which point, Waterville became the only station between Waukon and Waukon Junction.
Waterville is located in a very scenic area of Allamakee County. The city is close to many fishing streams and bountiful hunting areas. Yellow River State Forest is nearby. This small community hosts a variety of rural businesses serving the farmers and sportspeople and shoppers of the area. The current population is approximately 150. Paint Creek runs directly through Waterville. It is a stocked trout stream that offers fishing action with easy access from the road. There is also a handicap access in the Kolsrud Park on the west edge of town.