Centuries before the arrival of the first Europeans, Douglas was inhabited by Nipmucs, an Algonquin people who lived here in a settled agricultural and hunting society. The first European settlers established the town of New Sherborn in the 1720s, renaming it Douglas in 1746. As a crossroads for stagecoach turnpikes, Douglas enhanced its agricultural economy with trade and hospitality.
Local grist and saw mills harnessed the power of the Mumford River in the early 1800s, enabling manufacturing to grow, notably the production of edged tools by the Douglas Axe Manufacturing Company. Douglas' forests supplied superior timber, allowing production of cedar shingles, white pine ships' masts, and walnut and maple gunstocks and furniture. By the 1950s, woolen mills employed 92 percent of the local workforce.
Today, Douglas (population 7,100) is a thriving rural community with a diversified economy, boosted by a long tradition of productive re-use of its historic assets. Old mills have become apartments or have been adapted for contemporary manufacturing.
A livery stable and a factory are now used as a commercial business and a restaurant, and the 1835 E. N. Jenckes General Store has become a historical museum. Douglas has one designated historic district and is undertaking preservation of the Town Common, including old granite horse hitching posts and feeding troughs. The Douglas Historical Society is currently creating interpretive curricular materials based on the history of Douglas and the Jenckes store.
Designated a Preserve America Community in June 2004.