Nantucket takes its name from a word in an Eastern Algonquian language of southern New England, originally spelled variously as natocke, nantaticut, nantican, and nautican. The meaning of the term is uncertain, although it may have meant "in the midst of waters," or "far away island."^[2] Other sources state the indigenous American word "Natockete," meaning "faraway land," to be the origin of the name.^{[citation needed]} The Wampanoag who lived in Nantucket referred to the island as "Canopache," or "place of peace."^{[citation needed]}The island has a nickname, "The Gray Lady", which refers to the fog that occurs frequently on and about the Island.^{[citation needed]}

1870s street scene on Nantucket.

The earliest French settlement in the region began on neighboring island Martha's Vineyard, named after Bartholomew Gosnold's daughter Martha who died on board, en route. Nantucket Island's original Native American inhabitants, the Wampanoag people, lived undisturbed until 1641 when the island was deeded by the English (the authorities in control of all land from the coast of Maine to New York) to Thomas Mayhew and his son, merchants of Watertown and Martha's Vineyard. The entire area of New York county had been purchased by Thomas Mayhew Sr. of Watertown, Massachusetts, in 1641, buying out competing land claims. Nantucket was part of Dukes County, New York until 1691, when it was transferred to the newly formed Province of Massachusetts Bay and split off to form Nantucket County. As Europeans began to settle Cape Cod, the island became a place of refuge for regional Native Americans, as Nantucket was not yet settled by Europeans. The growing population welcomed seasonal groups of other Native Americans who traveled to the island to fish and later harvest whales that washed up on shore.

The history of Nantucket's settlement by the English did not begin in earnest until 1659, when Thomas Mayhew sold his interest to a group of investors, led by Tristram Coffin, "for the sum of thirty Pounds...and also two beaver hats, one for myself, and one for my wife". The "nine original porchasers" were Tristram Coffin, Peter Coffin, Thomas Macy, Christopher Hussey, Richard Swain, Thomas Barnard, Stephen Greenleafe, John Swain and William Pike. Seamen and tradesmen began to populate Nantucket, such as Richard Gardner (arrived 1667) and Capt John Gardner (arrived 1672), sons of Thomas Gardner (planter). ^[3]

Herman Melville comments on Nantucket's whaling dominance in Moby-Dick, Chapter 14: "Two thirds of this terraqueous globe are the Nantucketer's. For the sea is his; he owns it, as Emperors own empires." The Moby-Dick characters Ahab and Starbuck are both from Nantucket.

Whale weathervane atop the Nantucket Historical Association Whaling Museum

In his 1835 history of Nantucket Island, Obed Macy wrote that in the early pre-1672 colony a whale of the kind called "scragg" entered the harbor and was pursued and killed by the settlers.^[4] This event started the Nantucket whaling industry. A. B. Van Deinse points out that the "scrag whale", described by P. Dudley in 1725 as one of the species hunted by the early New England whalers, was almost certainly the Gray Whale which has flourished on the West Coast of North America with protection from whaling.^[5][6]

By 1850, whaling was in decline, as Nantucket had been supplanted by New Bedford. The island suffered great economic hardships, worsened by the July 13, 1846 "Great Fire" that, fueled by whale oil and lumber, devastated the main town, burning some 40 acres.^[7] It left hundreds homeless and poverty stricken, and many people left the island. Another contributor to the decline was the silting up of the harbor which prevented the large whaling ships from entering and leaving the port. In addition, the development of railroads made mainland whaling ports (such as New Bedford) more attractive because of the ease of transshipment of whale oil onto trains, an advantage unavailable to an island.