Bethesda is located in a region populated by the Piscataway and Nacotchtank tribes at the time of European contact. Henry Fleet (1602–1661) was an English fur trader and the first European to travel to the area, which he reached by sailing up the Potomac River. He stayed with the Piscataway tribe from 1623 to 1627 as both a guest and a prisoner, then returned to England. He spoke of potential riches in fur and gold, and won funding for another American expedition. The tribes living on the land that became Bethesda were forced into reservations and decimated by communicable diseases to which they had no immunity.
Most early settlers in Maryland were tenant farmers who paid their rent in tobacco, and colonists continued to push farther north in search of fertile land. Henry Darnall (1645–1711) surveyed a 710-acre (2.9 km2) area in 1694 which became the first land grant in Bethesda. and tobacco farming was the primary way of life in Bethesda throughout the 1700s. The establishment of Washington, D.C. in 1790 deprived Montgomery County of its economic center at Georgetown, although the event had little effect on the small farmers throughout Bethesda.
Between 1805 and 1821, Bethesda became a rural way station after development of the Washington and Rockville Turnpike, which carried tobacco and other products between Georgetown and Rockville, and north to Frederick. A small settlement grew around a store and tollhouse along the turnpike by 1862 known as "Darcy's Store", named after the store's owner William E. Darcy. The settlement was renamed in 1871 by postmaster Robert Franck after the Bethesda Meeting House, a Presbyterian church built in 1820. The church burned in 1849 and was rebuilt the same year about 100 yards (91 m) south, and its former location became the Cemetery of the Bethesda Meeting House.
Bethesda did not develop beyond a small crossroads village through the 19th century, consisting of a blacksmith shop, a church and school, and a few houses and stores. In 1852, the postmaster general established a post office in Bethesda and appointed Rev. A. R. Smith its first postmaster. A streetcar line was established in 1890 and suburbanization increased in the early 1900s, and Bethesda began to grow in population. Communities that were situated near railroad lines had grown the fastest during the 19th century, but mass production of the automobile ended that dependency and Bethesda planners grew the community with the transportation revolution in mind. This included becoming a key stopping point for the B & O railroad on their Georgetown Branch line completed around 1910 that ran from Silver Spring to Georgetown, passing through Bethesda on the way. The branch had a storage yard there and multiple sidings that served the industries in Bethesda in the early 20th century. B & O successor CSX ceased train service on the line in 1985, so the county transformed it into a trail in the rails-to-trails movement. The tracks were removed in 1994 and the first part of the trail was opened in 1998; it has become the most used rail trail in the United States, averaging over one million users per year.
Subdivisions began to appear on old farmland in the late 19th century, becoming the neighborhoods of Drummond, Woodmont, Edgemoor, and Battery Park. Farther north, several wealthy men made Rockville Pike famous for its mansions. These included
Brainard W. Parker ("Cedarcroft", 1892),
James Oyster ("Strathmore", 1899),
George E. Hamilton ("Hamilton House", 1904; now the Stone Ridge School),
Luke I. Wilson ("Tree Tops", 1926), Gilbert Hovey Grosvenor ("Wild Acres", 1928–29), and
George Freeland Peter ("Stone House", 1930). In 1930, Dr
Armistead Peter's pioneering manor house "Winona" (1873) became the clubhouse of the Woodmont Country Club on land that is now part of the National Institutes of Health (NIH) campus.
Merle Thorpe's mansion "Pook's Hill" (1927, razed 1948) became the home-in-exile of the Norwegian Royal Family during World War II.
World War II and the subsequent expansion of government further fed the rapid growth of Bethesda. Both the National Naval Medical Center (1940–42) and the NIH complex (1948) were built just to the north of the developing downtown, and this drew government contractors, medical professionals, and other businesses to the area. In recent years, Bethesda has consolidated as the major urban core and employment center of southwestern Montgomery County. This recent growth has been vigorous following the expansion of Metrorail with a station in Bethesda in 1984. Alan Kay built the Bethesda Metro Center over the Red line metro rail which opened up further commercial and residential development in the immediate vicinity. In the 2000s, the strict height limits on construction in the District of Columbia led to the development of mid- and high-rise office and residential towers around the Bethesda Metro stop, effectively creating a major urban center.