The original inhabitants of Absecon Island (home to Atlantic City) were the Lenni-Lenape Indians. The first owner of Absecon Island was Englishman Thomas Budd. In the late 1670s, Budd was given the island and other property to settle a claim against the holders of the royal grant in the area. His beach land was valued at just $0.04 an acre, versus the millions of dollars each acre is worth today.

For the next hundred years, the island was visited by Indians, hunters and some early mainland settlers. In 1785, Jeremiah Leeds was the first man to build a permanent structure on the island. Jeremiah and his family were the first official residents of Atlantic City. Their farm was called Leeds Plantation, where Leeds grew corn and rye and raised cattle. Following Leeds’ death in 1838 , his wife Millicent got a license to operate a tavern called Aunt Millie's’s Boarding House, the first business in Atlantic City.  Several of Jeremiah and Millicent’s children were important in their own right. Robert B. Leeds, was the city’s first postmaster. Another son Chalkey Leeds, became the city’s first mayor in 1854.

Dr. Jonathan Pitney, a prominent physician who lived in Absecon, felt that the island had much to offer, but access to the island had to be improved. Pitney, along with a civil engineer, Richard Osborne, decided to bring the railroad to the island. In 1852, construction began on the Camden-Atlantic City Railroad. In July, 1854, the first train arrived and the invasion of tourists began.

Osborne has been credited with naming the city.  Dr. Pitney build the plan for the names and placements of the city streets, which remains today. Streets running parallel to the ocean would be named after the worlds great bodies of water, Pacific, Atlantic, Baltic, Mediterranean, Adriatic, and Arctic, while the streets which ran east to west would be named after the States.

Atlantic City became a bustling seaport in addition to a railway destination. Following a number of tragic wrecks off the coast, Dr. Pitney called for the construction of a lighthouse in 1854. The lighthouse, in the Inlet section of the city, was originally at the edge of the ocean, but now stands over 1/2 mile from the beach.

The first official road from the mainland to the island was completed in 1870, after 17 years of construction. 

By 1878, one railroad couldn't handle all the passengers wanting to go to the Shore, so the Narrow Gauge Line to Philadelphia was constructed. By this time massive hotels like the Surf House, as well as smaller rooming houses were commonplace in Atlantic City. The first commercial hotel, the Belloe House, was built in 1853, and operated till 1902. The United States Hotel took up a full city block. These grand hotels were not only impressive in size, but featured the most updated amenities, and were considered quite luxurious for the time.

In 1870, Alexander Boardman, a conductor on the Atlantic City-Camden Railroad, was asked to think up a way to keep sand out of the hotels and rail cars. Boardman presented an idea to City Council. In 1870, and costing half the towns tax revenue that year, an eight foot wide wooden foot walk was built from the beach into town. This first Boardwalk, which was taken up during the winter, was replaced with another larger structure in 1880. The Boardwalk today is 60 feet wide, and 6 miles long. Its planks, placed in a herringbone pattern, are laid on a substructure of concrete and steel. Steel railings are in place to keep visitors from falling off to the beach below, and in accordance with an old City Council ordinance, hotels, restaurants and shops are kept on one side of the boards, with amusement piers on the other.

On June 16, 1880, Atlantic City was formally opened. With fanfare the likes few in the area had seen, a resort was born. By the census of 1900, there were over 27,000 residents in Atlantic City, up from a mere 250 just 45 years before. By 1883, the city had built its first school.  The next twenty-five years saw many firsts in the city. The First National Bank of Atlantic City was opened in 1881. The Atlantic City Hospital opened in 1898, and the public library opened in 1900. Trolley service began in the city in 1893, and ran until 1955. 

Atlantic City became "the’ place to go. Everyone could find some sort of entertainment to meet their tastes from the Diving Horse, Dr. Couney's Premature Infant Exhibit, marathon dance contests to side show acts. Entertainers from vaudeville to Hollywood graced the stages of the piers. Before relocating in 2005, the Miss America contest began its 85-year-run in 1921 as an effort to extend the tourist season.

Atlantic City's future seemed bright until World War II. In the years following the war, the public's love affair with The World's Favorite Playground ended. Jet air travel and interstate highways offered easy accessibility to alternate, far-off destinations offering more sophisticated entertainment. Atlantic City lost much of its shine, and most of its tourists.The 1964 Democratic National Convention put the spotlight on Atlantic City and gave the general public its first in-depth look at the extent to which conditions in the city had deteriorated. Poverty, unemployment and crime rates grew to among the highest in the country.

In 1976, New Jersey voters passed a referendum to allow gambling in Atlantic City in an effort to bring the tourists back to save the city. Two years later, the first of Atlantic City's current twelve casinos, Resorts International, opened to strong business. With one-quarter of the U.S. population living within a six-hour drive and with no other legal casino gambling options in the U.S. outside of Nevada, the future indeed looked bright; Atlantic City quickly became the top tourist destination on the East Coast in terms of numbers of visitors. Today, Atlantic City is still the biggest casino gambling destination outside of Nevada, but the impact of competition from other casino venues which have opened throughout the U.S. over the last twenty years is apparent.

Casino gambling has revitalized Atlantic City to some extent, though it has never returned to its pre-war glory and status as a family resort destination. Critics are quick to point out that nearly thirty years after the first casino tax revenues were generated, much of the economic impact on Atlantic City is visible only in the areas in the immediate vicinity of the casinos while large sections of the city remain unimproved and impoverished.