Falmouth was first settled in 1660 and was officially incorporated in 1686, and named by Bartholomew Gosnold for Falmouth, Cornwall, England, his home port. Early principal activities were farming, salt works, whaling and shipping, and sheep. Sheep husbandry was very popular due to the introduction of Merino sheep and the beginnings of water-powered mills that could process the wool. In 1837, Falmouth averaged about 50 sheep per sq. mile.

It is the birthplace in 1859 of Katharine Lee Bates, lyricist of America the Beautiful.

Falmouth's public school system serves about 4,500 students yearly. There are four schools ( East Falmouth, Mullen-Hall, North Falmouth, and Teaticket) which serve the elementary school population, from pre-kindergarten to fourth grade. The Morse Pond Middle School serves grades five and six, while the Lawrence Junior High School serves grades seven and eight. High School covers grades 9-12. FHS's athletics teams are nicknamed the Clippers, and their colors are maroon and white. They compete in the Atlantic Coast League, having moved recently from the Old Colony League. Their chief rival is nearby Barnstable High School. The public schools are supported in part by the Volunteers in Public Schools (VIPS), various PTO associations, the Falmouth Scholarship Association, the newly created Falmouth Education Foundation (FEF), and the Woods Hole Science Technology Partnership.

Falmouth is also the home of two private schools: Falmouth Academy, a private school which serves grades 7 through 12; and Heritage Christian Academy, a pre-kindergarten through eighth grade school which is affiliated with the Assemblies of God. Falmouth high school students may also choose to attend the Upper Cape Regional Technical School in Bourne free of charge, or Sturgis Charter Public School in Hyannis, also free of charge.