The city of Anaheim was founded in 1857 by grape farmers and wine makers from Franconia in Bavaria. The first such settler was Daniel Kraemer. The colony was situated on 1,165 acres (4.71 km2).

Settlers voted to call the community Annaheim, meaning Annahome or more longly "Home in the valley" in German. The name later was changed slightly, to Anaheim. To the Spanish-speaking neighbors, the settlement was known as Campo Alemán (Spanish for German Field). The grape industry was destroyed in the 1880s by an insect pest. Other crops – walnuts, lemons and, of course oranges – soon filled the void, fruits and vegetables having become viable cash crops when the Los Angeles – Orange County region was connected to the continental railroad network in 1886.
The famous Polish actress Helena Modjeska settled in Anaheim with her husband and various friends, among them Henryk Sienkiewicz, Julian Sypniewski and ?ucjan Paprocki. While living in Anaheim, Helena Modjeska became good friends with Clementine Langenberger, the second wife of August Langenberger. Helena Street and Clementine Street are named after these two ladies, and the streets are located adjacent to each other as a symbol of the strong friendship which Helena Modjeska and Clementine Lagenberger shared. Modjeska Park in West Anaheim, is also named after Helena Modjeska.

In the 1920s, the Ku Klux Klan, at the height of its influence and popularity, decided to make Anaheim a "model" Klan city. In 1924, the Klan secretly managed to get four of its members elected to the five-member Board of Trustees. Nine of the ten members of the police force were also Klansmen. The four Klan trustees served for nearly a year, until they were publicly exposed, and voted out in a recall election in which 95% of the population participated.
During the first half of the 20th century, before Disneyland opened its doors to the public, Anaheim was a massive rural community inhabited by orange groves, and the landowners who farmed them. One of the landowners was a man by the name of Bennett Payne Baxter. He owned much land in northeast Anaheim that today is the location of Edison Park. He came up with many new ideas for irrigating orange groves and shared his ideas with other landowners. He was not only successful, he helped other landowners and businesspeople succeed as well. Ben Baxter and other landowners helped to make Anaheim a thriving rural community before Disneyland changed the city forever. Today, a street runs along Edison Park which is named Baxter Street. Also during this time, Rudolph Boysen served as Anaheim's first Park Superintendent from 1921 to 1950. Boysen created a hybrid berry which Walter Knott later named the boysenberry, after Rudy Boysen. Boysen Park in East Anaheim was also named after him.
The Disneyland theme park was constructed in Anaheim from July 16, 1954 to July 17, 1955, and opened to the public on July 18, 1955, and has since become Anaheim's largest tourist attraction. The location was formerly 160 acres (0.65 km2) of orange and walnut trees, some of which remain inside Disneyland property. Hotels and motels began to spread and residential districts soon followed, with increasing property values. In 2001, Disney's California Adventure, since renamed Disney California Adventure in 2010, the most expansive project in the theme park's history, opened to the public.
In the late 20th century, Anaheim grew rapidly in population. Today, Anaheim has a diverse ethnic and racial composition.
During the large expansion of the Disneyland resort in the 1990s, the city of Anaheim then recognized itself as a resort epicenter, thus creating the Anaheim Resort. It includes the Disneyland Resort, the Anaheim Convention Center, the Honda Center--home of the NHL Anaheim Ducks (formerly known as the "Mighty Ducks"), and Angel Stadium, home to the Los Angeles Angels of Anaheim. The city has undergone a rigorous transformation in creating metropolitan beautification to attract tourism. In 2007, the city celebrated its sesquicentennial (150th anniversary) by opening the Anaheim Walk of Fame near the Harbor Boulevard entrance to the Disneyland Resort. The first star to be placed on the Anaheim Walk of Fame was Walt Disney, the man most responsible for making Anaheim the hugely popular tourist destination it is today.