Bethesda is situated along a major thoroughfare that was originally the route of an ancient Native American trail. Henry Fleet (1602–1661), an English fur trader, was the first European to travel to the area, which he reached by sailing up the Potomac River. After staying for several years (1623–27) with the Piscataway tribe—variously as a guest or prisoner—he returned to England, spoke of potential riches in fur and gold, and won funding for another North American expedition.
Most early settlers in Maryland were tenant farmers who paid their rent in tobacco. The extractive nature of tobacco farming meant that colonists continued to push farther north in search of fertile land, and in 1694 Henry Darnall (1645–1711) surveyed a 710-acre (2.9 km2) area that became the first land grant in present-day Bethesda. Rural tobacco farming was the primary way of life in Bethesda throughout the 1700s; while the establishment of Washington, D.C., in 1790 deprived Montgomery County of Georgetown, its economic center, the event had little effect on the small farmers throughout Bethesda.
Between 1805 and 1821, the area of present-day Bethesda became a rural way station after development of a toll road, 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, the community was known as "Darcy's Store" after the owner of a local establishment, William E. Darcy. The settlement was renamed in 1871 by the new postmaster, Robert Franck, after the Bethesda Meeting House, a Presbyterian church built in 1820 on the present site of the Cemetery of the Bethesda Meeting House. The church burned in 1849 and was rebuilt the same year about 100 yards (91 m) south at its present site.
Throughout most of the 19th century, Bethesda never developed beyond a small crossroads village, 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. It was not until the installation of a streetcar line in 1890 and the beginnings of suburbanization in the early 1900s that Bethesda began to grow in population. Until that time, dependence on proximity to rail lines insulated Bethesda from growth, even as surrounding communities located directly on these lines blossomed. The arrival of the personal automobile ended this dependency, and Bethesda planners grew the community with the newest transportation revolution in mind.
Subdivisions began to appear on old farmland, becoming the neighborhoods of Drummond, Woodmont, Edgemoor, and Battery Park. Further 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 original 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)—on the site of the current neighborhood of the same name—became the home-in-exile of the Norwegian Royal Family during World War II.
That war, and the expansion of government that it created, further fed the rapid expansion 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. This, in turn, drew further 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 significantly 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.