Webster was first settled in 1713 and was officially incorporated on March 6, 1832. The area forming the town had previously been divided among the town of Dudley, the town of Oxford and an unincorporated gore. The primary founder was the manufacturer Samuel Slater, who came to the area after his celebrated activities in Pawtucket, Rhode Island, and founded several textile mills, one of which was taken over by the Cranston Print Works in 1936. He named the town after his friend Daniel Webster. Slater spent his last years in Webster and died and is buried there in Mount Zion Cemetery
The town is bounded on the north by Oxford; on the east by Douglas; on the south by Thompson, Connecticut, and on the west by Dudley, with which it is most closely tied culturally and politically.
The town is home to Lake Chaubunagungamaug, also known as "Webster Lake", a body of water with a surface area of 1,442 acres (584 ha). Lake Chargoggagoggmanchauggagoggchaubunagungamaugg, a 45-letter alternative name for this body of water, is often cited as the longest place name in the United States and one of the longest in the world. Today, "Webster Lake" may be the name most used, but some residents of Webster take pride in reeling off the longer versions
As of the census of 2000, there were 26,613 people, 8,594 households, and 6,540 families residing in the town. The population density was 2,614.1 people per square mile (1,009.4/kmē). There were 8,861 housing units at an average density of 870.4 per square mile (336.1/kmē).