A part of the town was involved in a boundary problem involving New York and Connecticut. A section of the town, "the Oblong," was settled by Quakers in the 18th century, probably around 1720. The Quaker Meeting House is still standing today, and open for visitors. George Washington established his headquarters in the town for two months. The town was founded in 1788, but part of the town was used to form the Town of Dover in 1807.

The town's burial place, Pawling Cemetery, located on the west Side of Route 22, is the final resting place for New York Governor and Presidential Candidate Thomas E. Dewey (1902-1971) (best known for the erroneous headline of "Dewey Defeats Truman" during the 1948 United States Presidential race), United States Navy Rear Admiral John Lorimer Worden (1818-1897), commander of the ironclad USS Monitor during the American Civil War, motion picture actress Silvana Mangano (1930-1989), Civil War Congressional Medal of Honor Recipient John J. Toffey (1844-1911), and United States Congressman Ralph Waldo Gwinn (1884-1962), who represented New York's 27th District from 1945 to 1959.

The oldest public golf course in the United States, the Dutcher Golf Course, also is in Pawling, and still in use.

Communities and locations in Pawling: