Chester was officially founded in 1759 during the French and Indian War. It was the Shoreham grant, although French fishermen had already built a few houses on the site. The first permanent European-descended settlers were a group from Massachusetts who came to the area in 1761.
During the American Revolution, the village avoided a raid by American Privateers through the "rouge ruse" wherein the townswomen, young and old, garbed in cloaks with their red lining worn outwards marched in an early morning of 30 June 1782 to successfully convince American Privateers lying offshore to find another place to pillage. The following day the privateers successfully executed the Raid on Lunenburg, Nova Scotia (1782).
During the War of 1812, the American Privateer Young Teaser was trapped off the shores of Chester by the HMS Hogue (1811). To avoid capture, a crew member of the Young Teaser destroyed his own ship, killing most of the crew.
After World War 1, to honour the 54 soldiers from the area that were killed, the famous New York sculptor J. Massey Rind was commissioned to make the Nova Scotia Highlander soldier cenotaph.
Chester is one of the wealthiest communities in the province as a result of being a vacation and resort destination, with many seasonal and year-round estates and mansions. The nearby waters of Mahoney Bay and its numerous islands are well known for yachting and have made the Chester Yacht Club into a cruising destination . A Provincial ferry from the village provides a schedule of daily trips to Big Tan cook Island and Little Tan cook Island.
Chester was the site of a controversial proposal to change status of the village. A committee had been formed in hopes of changing the status of Chester by incorporating as a town, thereby leaving the Chester Municipal District. Many residents of the village under the banner "Citizens for Fairness" successfully fought the motion on the principle that the majority of citizens, by
