Oskaloosa can trace its roots back to the time that the state of Iowa was born. In the mid 1800's, a group of Quakers settled in an area southeast of Des Moines, midway between the Skunk and Des Moines rivers. The first settler in what was to become Mahaska County was William Canfield, who established a trading post to Oskaloosa. He built the first home here after the town was platted in 1844, and in that same year, Oskaloosa was established as the county seat of Mahaska County. The county was named after a chief of the Ioway tribe, Chief Mahaska (White Cloud) and was staked out in 1844.In 1844, Oskaloosa was a pioneer village containing only 13 crude, cabins and two stores. The town grew rapidly and by 1853, when it was incorporated, had a population of about 1,000. Oskaloosa was named for a Creek princess named Ouscaloosa, which means "last of the beautiful". Ouscaloosa was captured by the Seminoles and married Osceola, a Seminole Chief.
During the 1850s and 1860s, the Western Stage Co. maintained barns where what is now the corner of High Avenue East and South Third Street. Passengers embarked on their travels from the Madison House, a hotel that was located on the east side of the downtown square, which later became known as the Downing Hotel.
Mahaska County was rich in bituminous coal, and in the 1870s, coal mining became a part of the local economy. In 1883, the area had 38 mines and an annual output of more than a million tons. In the prime days of mining, Mahaska County surpassed all other Iowa counties in tonnage and number of mines. The advent of transcontinental railroads also was a boon to Mahaska County. The locomotives moved coal out of the area year round as demand for coal increased.
In the late 1800s and early 1900s, many of Oskaloosa's present landmarks were built. In 1873, William Penn College was founded as Penn Academy. Also that year, the first bandstand was built in the city square. In 1886, the Mahaska County Courthouse was built, and it remains in use to this day. In 1903, the Carnegie Library opened. Also, President Teddy Roosevelt helped dedicate the YMCA building. In 1907, a new hospital opened, and in 1909 a statue of Chief Mahaska was dedicated. In 1925, the first ground was broken in the construction of Community Stadium. The stadium was completed in 1929 and was used for both football and track- it remains in use today.
Former Oskaloosa resident James Edmundson made a bequest in 1937 to the city of Oskaloosa, and Edmundson Park was created. Edmundson was the son of William Edmundson, who was one of the founders of Mahaska County and the county's first sheriff. Currently, there are 41 sites in Oskaloosa, ranging from the Oskaloosa City Park and Bandstand to the Forest Cemetery entrance, that were placed on the National Register of Historic Places.
The late 1900s saw a new growth in Oskaloosa's cultural & economical scene. Penn Central Mall opened its doors in 1985. In 1991, a $580,000 restoration of the city square and bandstand were completed. In 1998, the Oskaloosa Symphony performed for the first time. In 1999, the statue of Chief Mahaska was cleaned and rededicated; descendents of the chief attended the ceremony. The George Daily Community Auditorium also opened its doors in 2000. The 700-seat auditorium is a cornerstone of the fine arts in Oskaloosa. In the early years of the 21st century, community members formed the Oskaloosa Arts Fellowship to promote the arts in Oskaloosa. It is now known as FACE: Fine Arts and Cultural Events.
Oskaloosa's economy centers on a booming retail trade, agriculture and a strong industrial park. These diversified areas of commerce have helped give the city a stable and growing economy.