The first European settlers arrived in the early 1850s and initially founded two separate villages: Moritzious (which incorporated in 1858) and Monticello (incorporated in 1856). Ferry service began in the spring of 1855 at Moritzious. The two were combined into a united Monticello in 1861, a name derived from a hill about two miles southeast of the village. Most early businesses located along the Mississippi River. Monticello saw about three steamboat landings a week in the late 1850s but regular service was finished by the late 1870s. The main reason for the decline was logging: the river was often too choked with cut timber for steamboats to pass by. The nearby island in the Mississippi River was a favorite place to swim and fish in the summer; in the winter, the shallower water around the island froze and made for good ice skating.
Swarms of grasshoppers in 1856 and 1857 convinced many early settlers to try settling somewhere else. The ones who stuck around were primarily Protestants from New England, many of whom were dedicated temperance advocates. When Hull Hotchkiss opened a tavern in 1858, he was warned by locals to shut it down. He refused, so a mob disguised as Indians ransacked the place, destroying $800 worth of booze and the building. Hull didn’t rebuild.
The Monticello Starch Company was a big employer for a while in early 1900s. By the middle of the 20th century, mainstays in the local economy included a creamery, a lumberyard, and two mills. Passenger rail service ended around 1960; at its peak, four trains a day stopped in Monticello. During World War II, the area was home to a training school for glider pilots.
Monticello is home to one of the oldest Methodist congregations in the state—Community United Methodist Church—with roots back to 1855. Before the Civil War, the church opened its doors to slaves who were fleeing to Canada via the Underground Railroad, although they were restricted to the balcony during services.