Cambridge was formed in 1973 by the amalgamation of Galt, Preston, Hespeler, the settlement of Blair and a small portion of surrounding townships. The former Galt covers the largest portion of Cambridge, making up the southern half of the city, while Preston and Blair cover the western side. Hespeler makes up the most northeastern section of Cambridge. Historical information and records of each entity are well documented in the Cambridge City Archives.

In the late 1700s, developers began to buy land around the Grand River from the Six Nations who were led by Joseph Brant. One speculator, William Dickson, a wealthy immigrant from Scotland, bought 90,000 acres (360 km2) of land along the Grand River in 1816; this was later to become Galt and the Dumfries Townships. Dickson divided the land and sold smaller lots, particularly to Scottish settlers. The centre of the planned community was at the junction of Mill Creek and the Grand River, then called Shade’s Mills.

Dickson decided to name the Post Office Galt, in honour of John Galt of the Canada Company which was developing this entire area. Primarily agricultural in early years, Galt had attracted industry by 1840 and became the largest town in the Grand River area until the early 1900s. The town continued to grow, however, based on a large industrial base.